The three-day meeting of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has commenced today. A decision on the repo rate and policy rates will be announced on October 1. Experts anticipate that rates will remain stable before Diwali, and the wait for cheaper loans will continue.
RBI MPC Meeting: The three-day meeting of the six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is commencing today in Mumbai. The primary objective of this meeting is to assess the country's current economic situation and make decisions on the repo rate and other policy rates. The meeting will continue until October 1, and RBI Governor Sanjay Malhotra will announce the decisions on Wednesday morning at 10 AM.
What will be considered in the MPC meeting
During the meeting, committee members will deliberate on inflation, economic growth, demand, and market conditions. In the previous August meeting, the repo rate was kept stable at 5.5%. Prior to that, a reduction of 50 basis points was made in June, and 25-25 basis points in February–April. A total increase of 250 basis points occurred between May 2022 and February 2023.
Typically, two main issues are focused on during RBI's MPC meetings. First, the level of inflation and the trend of the Consumer Price Index (CPI). Second, economic growth and the GDP growth rate. Changes in the repo rate and other policy rates are decided after assessing these two factors.
Likelihood of Repo Rate Cut
According to economic experts, the possibility of a repo rate cut in October is low. As per Aditi Nayar, Chief Economist at ICRA, GST reforms in October–November could lead to a reduction in inflation. However, due to increased demand, the MPC is likely to keep the repo rate stable.
According to a Business Standard survey (BS Poll), most of the ten economists from banks and financial institutions expect the MPC to maintain the rate in October. However, some, like the State Bank of India, foresee a potential 25 basis point cut in this meeting.
Gaura Sen Gupta, Chief Economist at IDFC FIRST Bank, states that given robust growth in Q1FY26, the RBI will first assess the impact of tax and GST cuts. By the December policy, post-festive consumer demand and the outcomes of US tariff negotiations will become clear. If a trade agreement is reached and bilateral tariffs decrease by up to 25%, the terminal rate could remain at 5.5%, otherwise it could go down to 5%.
Inflation and GDP Forecast
According to experts, the RBI might lower its inflation forecast for FY26. GST reforms will have a positive impact on inflation, and the recent trend of CPI also appears soft. In August 2025, India's retail inflation was 2.07%, compared to 1.61% in July. Experts suggest that GST cuts could lead to a reduction of approximately 90 basis points in inflation this fiscal year.
Regarding the GDP growth rate, most experts expect it to be maintained at 6.5% for FY26. They stated that despite the risks of US tariffs, ongoing negotiations could lead to a resolution, therefore, no change in the growth rate is needed.
Need for Rate Cut
According to brokerage house Nuvama, a rate cut will not be easy in the upcoming MPC meeting. It is crucial to observe the impact of GST reforms amidst weak demand, expensive tariffs, and general inflation. The MPC may first want to see how tax cuts have affected demand.
Furthermore, an increase in the Consumer Price Index and a weakening rupee will also be factored into the MPC's considerations. In the previous policy review, the MPC stated that there was limited scope for further rate cuts.
RBI's Stance
Nuvama's report states that the MPC will likely maintain the current rate. Inflation is currently within the RBI's target, but it is expected to rise by the end of the year. The RBI will only consider further rate cuts after fully understanding the impact of previously implemented rate cuts.
The RBI also stated that economic growth cannot be accelerated solely through monetary policy. Fiscal measures are more effective in boosting demand. While GST cuts could increase consumption, the MPC may currently wait to assess their impact.
