RBI MPC meet today: Will rate panel go for a cut amid growth uncertainty?

The RBI’s monetary policy committee is to meet from September 29 to October 1.

Reserve Bank of India's Monetary Policy Committee (MPC) decision is likely to be a close call on the rate action with economists spilt on their views on the rate cut and a pause amid concerns of growth.

SBI Research in its report has said that there is a merit in a cutting rate in upcoming monetary policy, but will require a calibrated communication as post June, the bar for rate cut is indeed higher.  The report added that 25 basis points cut is best fit for this policy.

“There is no point in committing a Type II error again by not cutting rates now. CPI inflation for FY27 is tracking at 4 percent or less, and with GST rationalisation, October CPI could be closer to 1.1 percent, the lowest since 2004,” SBI Research said in a note.

Additionally, the report said that a timely cut would project RBI as a “forward-looking central bank” at a time when global yields are hardening.

IDFC First Bank report said the RBI to stay on pause this time, contending that the need for a cut will depend on how growth risks play out.

“From a real rates perspective, there is space to cut, but the need will depend on growth risks. The GST cut gives a 0.6 percentage point lift to GDP, but escalating US trade tensions could shave off as much as 1 percentage point. RBI is likely to wait for clarity post-festive season and cut in December if downside risks materialise,” IDFC First Bank report added.

Moneycontrol on September 16 has reported that bankers have ruled out a rate cut by the RBI in the upcoming monetary policy review but they do expect one more cut in the current fiscal.

The RBI’s monetary policy committee is to meet from September 29 to October 1.

The expected pause will be the second such decision after the August policy. The central bank has reduced the repo rate by 100 basis points since February before hitting a pause in August.

Supporters of an immediate cut warn that delaying action could “amplify future costs,” especially with inflation already at 2.05% and poised to hit historic lows due to GST rationalisation. Others, however, see merit in waiting till December when the festive demand boost and tariff clarity will provide a better growth signal.

For the RBI, the upcoming meeting is a tightrope walk between maintaining policy credibility and extending support to growth. Market will be closely watching the central bank’s future action on rates.