By Martin Shwenk Leade
Copyright indiatimes
The Reserve Bank of India (RBI) is set to announce its repo rate decision today, Wednesday, 1 October 2025, with analysts predicting a close call. The Monetary Policy Committee (MPC) faces a delicate balance: inflation remains low, while economic growth faces pressure from rising global trade tensions and other factors.Repo Rate Likely to Stay SteadyMost economists expect the RBI to keep the repo rate unchanged at 5.5%, although some predict a modest 25-basis-point cut. Even those favouring a hold acknowledge there are arguments for easing, given the subdued inflation and slower growth outlook.Bank of Baroda’s economists note that while a quarter-point rate cut would be a welcome surprise, the central bank is expected to maintain the policy rate for now, keeping a cautious stance in view of the rupee’s recent slide to record lows.Balancing Inflation and GrowthInflation remains at the lower end of the 2%–6% target band, supported by recent tax cuts and an above-normal monsoon. This gives the RBI some room to consider easing, yet growth concerns, exacerbated by high US tariffs, make any immediate cut a careful decision.Even if the repo rate is lowered by 25 bps, analysts expect India’s GDP forecast for FY26 to remain unchanged, as monetary policy adjustments typically take a few quarters to fully impact the economy.Live EventsDovish Commentary ExpectedWhile the policy rate may remain steady, the RBI’s commentary could take a dovish tone. Economists anticipate the central bank may trim its FY26 inflation projection by around 50 bps, which could provide relief to bond markets while maintaining a neutral overall stance.Investors and analysts will closely monitor the governor’s remarks for indications of future monetary policy, including the potential for further rate cuts later in the cycle. Some see room for the repo rate to fall to 5% if economic conditions warrant.Inflation and Growth OutlookDespite inflation nudging slightly higher to 2.07% in August, the overall outlook remains benign. The tax cuts are expected to support consumption and offset headwinds from tariffs, keeping growth near the upper end of the government’s 6.3%–6.8% forecast. The RBI’s own projection for this fiscal year is 6.5% growth.India’s economy showed strong 7.8% growth in Q1, though some economists caution this figure may overstate actual strength when adjusted for inflation. Nonetheless, the strong performance highlights the resilience of the economy despite global uncertainties.What to Expect from the RBI TodayThe MPC’s decision will be watched for both the repo rate action and the accompanying policy commentary. While a rate cut remains possible, the likelihood is that the RBI will hold rates steady and signal a cautious, dovish outlook for inflation and growth.For borrowers, investors, and businesses, the announcement today will set the tone for interest rates, credit costs, and market expectations for the months ahead.Add as a Reliable and Trusted News Source Add Now!
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