RBI’s MPC Meeting Begins Today, All Eyes on Possible Repo Rate Cut

New Delhi (The Uttam Hindu): The Reserve Bank of India’s Monetary Policy Committee (MPC) meeting begins on Wednesday. This three-day meeting will conclude with an announcement on the key policy rate on Friday. The meeting comes at a time when inflation is at an all-time low and GDP growth remains strong. In the second quarter of the ongoing financial year, India’s real GDP growth stood at 8.2%, compared to 5.6% during the same quarter of FY 2024–25.

Inflation also eased in October, reflecting strong economic fundamentals and effective price-management measures. Madan Sabnavis, Chief Economist at Bank of Baroda, said, “Monetary policy is forward-looking, and inflation is expected to remain above 4% in Q4 of the current financial year and in FY27. This may keep the real repo rate between 1–1.5%. Since the policy rate already appears fair, we do not expect any change in the repo rate.”

Similarly, an SBI report stated that although there were expectations of a 25-basis-point rate cut until a few days ago, the strong Q2 GDP numbers and changing conditions now indicate that no adjustment in policy rates is likely in December. SBI believes the RBI may need to manage liquidity carefully and maintain a neutral stance to keep yields stable and ensure calibrated easing.

HSBC Global Investment Research, however, expects the RBI to cut the repo rate by 25 basis points on December 5, considering inflation is likely to remain well below the target in the near term. If this happens, the repo rate will fall from the current 5.50% to 5.25%.