Bankers rule out RBI rate cut in October, expect one later in FY26

Bankers rule out rate cut in October, expect one more in FY26

Bankers have ruled out a rate cut by the Reserve Bank of India (RBI) in the upcoming monetary policy review in October, but expect one more cut during the current financial year.

"No cut in October. There could be one more cut in FY26," said Rajneesh Karnatak, MD and CEO of Bank of India, at CNBC TV18's Banking Transformation Summit (3rd edition) in Mumbai.

Similarly, Ashok Chandra, MD and CEO of Punjab National Bank, said there are chances of one more rate cut in the current fiscal year, but not in the October policy.

The next meeting of the Monetary Policy Committee (MPC) of the RBI is scheduled from September 29 to October 1, 2025.

The expected pause in the October policy will mark the second consecutive pause after the August policy. The central bank has reduced the repo rate by 100 basis points since February before hitting pause in the August review.

On September 4, Moneycontrol reported that the major reduction in the Goods and Services Tax (GST) rates announced on September 3 may boost domestic demand and partly offset the drag from Trump’s tariffs, while giving the RBI more flexibility to extend its easing cycle in FY26.

Experts believe the GST reform will act as a cushion against tariff-related uncertainties. Should the US levies ease, the combined tailwind—along with the Centre’s fiscal support and easier monetary conditions—could lift confidence across manufacturing supply chains.

Experts added that the RBI’s Monetary Policy Committee is likely to see an improvement in consumption patterns following these reforms, which could influence its decision on a future rate cut.