Barclays said in a note that after a neutral pause in August, it sees the RBI MPC cutting policy repo rate by 25 bps on October 1, acknowledging that it is a close call versus a scenario of a dovish pause followed by a December cut.
The MPC meeting which has started on September 29, will deliver its decision on the rate action on October 1.
The MPC, which has cut rates by 100 bps this year, is expected to hold the rates on October 1, a Moneycontrol poll of economist, fund managers and treasury heads has said
Inflation seen at 3.2% this year, giving RBI room for one more rate cut
The note said that the Centre may slow down some of the government spending over the next two quarters, which may preserve the trend of fiscal consolidation. Aside of that, the GST reform may also impact the government's efforts to reduce debt.
India’s strong 7.8 percent GDP growth in April-June 2025 masks a worrying decline in jobs within unincorporated non-agricultural enterprises, raising questions about the inclusiveness of economic progress
Indian economy beat expectations in the first quarter growing at a stellar 7.8 percent even as the global economy was hurt by uncertainty. Can the country continue its growth momentum in coming quarters and can India best the 6.5% growth it achieved last year. More important, what does this mean for RBI policy in the coming months?
Data last week showed the economy expanded 7.8% in the April-June quarter — the most in over a year and way above the 6.7% median forecast in a Bloomberg survey of economists
On the trade front, economist estimates that exports could decline by $30 billion-35 billion over the year due to the tariff shock. Even after factoring in cheaper Russian oil, the net export loss would be $25 billion-30 billion, translating to a GDP drag of 60-80 bps annually.
India's Q1 FY26 GDP data, releasing Friday, will test whether the economy can sustain growth above RBI's 6.5 percent forecast despite mixed industrial signals and evolving consumption patterns
Of the 15 economists surveyed last week, nearly 67 percent said GST cuts would help offset at least part of the impact of higher duties imposed by Washington
Despite the industrial drag, economists say public spending, services, and rural demand supported growth
The RBI central bank will take a data-driven approach, will assess the full spectrum of primary, secondary, and tertiary effects of the tax overhaul before altering the policy stance, Bhattacharya has said
GST 2.0, which will likely see rates lowered on most goods and services, will cool inflation further, giving the RBI the room to ease monetary policy, they say
The overwhelming uncertainty emerging from the external environment, especially since the last few weeks, due to intense tariff announcements and trade negotiations is not only posing risks to global financial markets but also challenges to economies like India in terms of the growth outlook.
With trade negotiations still underway, assessing any growth-inflation impact right away is quite difficult. The RBI MPC had revised down its GDP growth estimate in February by 20 bps to 6.5 percent on-year, partly reflecting tariff-related risks, but uncertainty has accelerated since then.
The RBI governor hoped that India and the US will reach an “amicable solution” for both nations' trade concerns
The MPC is meeting at a time when retail inflation has remained lower than RBI’s medium term target of 4 percent and support is needed for growth revival amid tariff tensions.
The MPC will likely moderate its baseline forecast for GDP below the extant 6.5 percent, further supporting the case for a rate cut
A Moneycontrol poll, too, found that the RBI’s monetary policy committee is expected to maintain status quo
The central bank, so far has reduced the repo or the benchmark rate by 100 basis points (Bps) since February to aid growth, with 25 bps each in February and April respectively, and 50 bps in the June policy.
The report said that it is estimated that a 100 basis points (bps) slowdown in global growth can, ceteris paribus, pull down India’s growth by 30 bps.
With the rates expected to remain static till December 2025, we expect limited capital appreciation going ahead and shift our focus on accrual-based strategy.
The mega repo rate cut comes as retail inflation has softened significantly below the RBI's medium term target of 4%.
RBI Repo Rate News: The RBI MPC reduced the inflation projection for FY26 to 3.7 percent to 4 percent earlier. The GDP growth projection remained unchanged for FY26 at 6.5 percent.