Synopsis: The RBI’s three-day Monetary Policy Committee (MPC) meeting (Sept 29–Oct 1) is underway, with most analysts expecting the repo rate to remain unchanged at 5.5%. However, falling inflation, GST rationalisation, and US trade headwinds keep the door open for a surprise rate cut.
The Reserve Bank of India’s Monetary Policy Committee (MPC) has started its three-day meeting from September 29 to October 1, 2025, where it will review the key policy repo rate. The repo rate currently stands at 5.5%, and while experts widely anticipate a status quo, the possibility of a rate cut cannot be ruled out amid trade uncertainties and benign inflation.
Since February 2025, the RBI has already reduced the repo rate by 100 basis points, delivering significant monetary easing. In its August review, the central bank kept rates unchanged after earlier rounds of cuts.
Why Analysts Expect Status Quo
- GST Reforms Impact: According to ICRA, GST rationalisation has brought the FY26 average inflation close to 2.6%, moderating price pressures.
- Growth Outlook: Q1 FY26 GDP growth at 7.8% has outpaced expectations, supported by strong domestic demand and government investment.
- Inflation Trajectory: Experts expect inflation to slope upwards in the coming months, making RBI cautious on further easing.
Aditi Nayar, Chief Economist at ICRA, said:
“GST rationalisation is moderating inflation, but it also boosts demand. This suggests a status quo in October, though it’s a close call.”
Why a Rate Cut Still Possible
On the other hand, an SBI research note argued that inflation is poised to fall to its lowest since 2004, potentially dropping to 1.1% in October, giving the RBI room to act.
Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI, added:
“We believe CPI inflation may decline further by 65–75 basis points due to GST rationalisation. A rate cut now would project RBI as a forward-looking central bank.”
What’s Next
The final decision will be announced on October 1, 2025. With global uncertainties from US tariffs and India-US trade talks, RBI’s stance will be crucial for markets already battling FII outflows and rupee volatility.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult certified financial experts before making investment or economic decisions.
