Close call but RBI MPC could cut repo by 25 bps, economists say

RBI Expected to Cut Repo Rate by 25 BPs in December Meeting

The Reserve Bank of India's (RBI) monetary policy committee (MPC) is likely to reduce the benchmark policy repo rate by 25 basis points (bps) to 5.25 per cent on December 5, according to nine out of 15 economists polled by businessline.

Reasons for Rate Cut

• Benign Inflation: Retail inflation, as measured by the consumer price index (CPI), fell to 0.25 per cent in October 2025, lowest in the current CPI series.
• Expected Slowdown in GDP Growth: The economists expect a slowdown in GDP growth in H2FY26, which could lead to a rate cut to boost economic growth.
• Favourable Agricultural Prospects: Favourable agricultural prospects and stable brent crude prices are also expected to contribute to a benign inflation outlook.

Expert Views

Sakshi Gupta, Principal Economist, HDFC Bank: "Given the lingering risks on growth (in H2FY26) and inflation expected to remain well below 4 per cent until Q3 FY27, we see that there may still be a chance of another 25 bps rate cut at the upcoming policy."

Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank: "The sharply higher than expected Q2FY26 GDP growth was broad based but comes on the back of a very low deflator. The single digit nominal GDP growth continues to signal tepid underlying activity."

Case for No Rate Cut

Madan Sabnavis, Chief Economist at Bank of Baroda: "Given that monetary policy is forward looking and inflation in Q4FY26 and FY27 is likely to be in the 4 per cent plus region, yielding a real repo rate of 1-1.5 per cent, the policy rate appears to be at a fair level."

Anitha Rangan, RBL Bank's Chief Economist: "The bank does not expect a rate cut in next meeting as externalities and currency pressure are on the high."

Key Statistics

• India's GDP grew at 8.2 per cent in Q2FY26, highest in last six quarters.
• Retail inflation fell to 0.25 per cent in October 2025, lowest in the current CPI series.
• The RBI's monetary policy committee (MPC) is likely to reduce the benchmark policy repo rate by 25 basis points (bps) to 5.25 per cent on December 5.

Published on November 30, 2025