By Priya Raghuvanshi

Copyright timesnownews

With the next RBI monetary policy decision just around the corner, the debate on whether the central bank should slash rates or hold steady is heating up. A fresh SBI Research report has pitched a 25 basis points (bps) rate cut as the “best possible option”, citing controlled inflation and benign forecasts. However, many economists are leaning towards the status quo, as global and domestic uncertainties persist. The RBI Monetary Policy Committee (MPC), led by Governor Sanjay Malhotra, will begin its deliberations on Monday, September 30, with the decision to be announced on October 1 (Wednesday). SBI Research Pushes for Rate Cut According to SBI Research, a 25 bps reduction in the repo rate makes sense, especially given the expected soft inflation trajectory in the coming quarters. The report argues that “retail inflation is expected to remain benign even in the next financial year,” making it an opportune moment for policy easing. The RBI has already lowered rates by 100 bps between February and August 2025, though it maintained a pause in the August review, opting to wait and observe the effects of U.S. tariff hikes and global volatility. Mixed Opinions from Market Experts Not everyone agrees with SBI’s view. Madan Sabnavis, Chief Economist at Bank of Baroda, believes a rate cut is unlikely this time, despite inflation being under control, according to a PTI report. “While we do believe that there is limited scope for any change in the repo rate…a rate cut would be warranted,” he acknowledged, though he ultimately expects the status quo. Similarly, Aditi Nayar of ICRA noted that the recent GST rationalisation will lower CPI inflation by 25–50 bps through FY26 and FY27, but she said this won’t be enough to justify a rate cut in October, the report added. “This suggests a status quo for the repo rate in the October 2025 policy review, in what appears to be a close call,” she added. Global Factors and GST Changes Add Complexity Key global developments like the US imposing 50 per cent tariffs on Indian exports and the Federal Reserve’s recent 25 bps rate cut are also influencing sentiment. Dharmakirti Joshi of Crisil pointed to core inflation staying low and said this might justify a rate cut. “The rationalisation of GST rates will also likely contribute to reducing inflation further,” Joshi said, the report claims. Meanwhile, Mandar Pitale of SBM Bank (India) sees the RBI likely maintaining its current stance, at least until the full impact of the recent CRR cut is clear, it added. “The baseline view remains that of a prolonged pause with a small probability of residual rate cut in December MPC,” Pitale added. Get Latest News live on Times Now along with Breaking News and Top Headlines from Business, Companies and around the world.