Policy Decision by RBI on Repo Rate Expected by October 1 as RBI MPC Meeting Begins

Mumbai, Sept 29, 2025: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is scheduled to meet from September 29 to October 1, 2025. The decision will be announced on October 1 by RBI Governor Sanjay Malhotra at 10 AM.

Policy Expectations: Status Quo or Rate Cut?

In the previous MPC meeting held in August 2025, the RBI retained the repo rate at 5.50%, following a 50 basis point reduction in June 2025. Street largely expect the RBI to maintain the repo rate at 5.50% (unchanged), citing subdued inflation and potential risks to growth.

Current Economic Scenario and Inflation Trends

India’s consumer price inflation rose to 2.07% in August 2025 from 1.61% in July, marking the first monthly increase in ten months. Despite this uptick, inflation remains below the RBI’s 4% target and within its prescribed tolerance band, with higher food prices driving the increase. Recent rationalization measures in the Goods and Services Tax (GST) are expected to ease retail prices further, potentially moderating inflation in the near term. However, economists caution that factors such as global commodity price fluctuations and domestic demand pressures could push inflation upward in the coming months.

Growth Outlook and External Risks

India’s economy posted a strong 7.8% year-on-year growth in the June quarter, exceeding expectations. This growth has been largely supported by government spending, although private investment remains subdued. On the external front, challenges such as U.S. trade tariffs and global geopolitical uncertainties could weigh on future growth prospects.

Liquidity Management and Forward Guidance

The RBI’s liquidity interventions,
including a Cash Reserve Ratio (CRR) reduction in September 2025, are aimed at supporting economic activity. Despite these efforts, borrowing costs remain relatively high, particularly for central and state governments. The central bank is expected to adopt a neutral stance in its forward guidance, balancing the need to sustain growth while maintaining price stability.

Source: Bajaj Broking