Dearness Due to reduced lending pressure, the Reserve Bank of India (RBI) may reduce the repo rate by 0.25 percent in its next monetary policy meeting (MPC). However, some experts believe that the central bank may keep the interest rates stable in view of better than expected 8.2 percent GDP growth in the second quarter. Retail inflation based on Consumer Price Index has been below the lower limit of the government’s range (2 percent) for the last two months. Some experts believe that due to the boom in the economy, RBI can keep the interest rates unchanged. This uptick is supported by various reforms like fiscal consolidation, targeted public investment and GST rate cut.
MPC decisions will be announced on December 5
The next meeting of the Monetary Policy Committee is to be held from December 3-5, 2025. RBI Governor Sanjay Malhotra will announce the committee’s decisions on December 5. RBI started reducing the repo rate from February this year and till now it has been reduced by a total of 1.00 percent. The current repo rate of RBI is 5.5 percent. The cuts were stopped in August. According to some experts, due to reduced inflation pressure, RBI may cut the repo rate by 0.25 percent in the upcoming monetary policy meeting. According to a report by HDFC Bank, this year’s growth is higher than expected and inflation is lower than expected.
What does HDFC Bank report say?
According to HDFC Bank report, “Therefore, there will be a tough competition in the upcoming decision of RBI.” Given the risks to growth in the second half and the expectation that inflation will remain well below 4 percent till the third quarter of the financial year 2026-27, we feel that the repo rate may be cut again by 0.25 percent in the coming meeting.” A research report of the Economic Research Department of State Bank of India said that with strong GDP growth and minimal inflation, now the RBI has to tell the direction of the rate to the broader markets in the MPC meeting to be held this week.
What is the estimate of Madan Sabnavis, Chief Economist of Bank of Baroda?
Madan Sabnavis, Chief Economist of Bank of Baroda, said that there will be a tough competition on the repo rate in the upcoming policy. Since, monetary policy is forward thinking and accordingly the policy rate seems to be at a reasonable level at this time. “In these circumstances, we do not think there should be any change in the repo rate,” he said. CRISIL Chief Economist Dharamkirti Joshi said the repo rate could be cut by 0.25 per cent in December, growth remains strong, but a sharp decline in retail inflation in October has created additional room for a cut.
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