The RBI may trim the benchmark lending rate by 25 bps in its forthcoming monetary policy meeting, as inflationary pressures are subdued, though some experts believe the central bank is likely to keep the rate unchanged in the backdrop of better-than-expected GDP growth of 8.2 per cent in the second quarter. The central bank started its rate-easing cycle in February last year.

RBI May Trim Benchmark Lending Rate By 25 Bps As Inflationary Pressures Remain Subdued, Rate Will Not Budge In The Backdrop Of Rapid 8.2% GDP Growth

RBI to Consider Rate Cut in Upcoming Monetary Policy Meeting

The Reserve Bank of India (RBI) is expected to consider trimming the benchmark lending rate by 25 basis points in its forthcoming monetary policy meeting, as inflationary pressures are subdued.

Reasons for Rate Cut:

Subdued inflationary pressures
Consumer price index (CPI) based headline retail inflation ruling below 2% lower band mandated by the government

Opposition to Rate Cut:

Sustained economic growth due to fiscal consolidation, targeted public investment, and GST rate cut
Real repo rate appears to be at a fair level

Expert Opinions:

Madan Sabnavis, Chief Economist, Bank of Baroda: "It would be a close call on the repo rate. Given that monetary policy is forward-looking and inflation in Q4-FY26 and FY27 is likely to be in the 4% plus region, yielding a real repo rate of 1-1.5%, the policy rate appears to be at a fair level."
Dharmakirti Joshi, Chief Economist, Crisil: "We anticipate a 25-basis point cut in the repo rate in December. While growth remains robust, a significant decline in retail inflation in October has created additional room for this adjustment."
Aditi Nayar, Chief Economist, ICRA: "With the Q2 FY2026 GDP growth exceeding 8%, a rate cut in the December 2025 MPC review now appears unlikely, notwithstanding the series-low CPI inflation print for October 2025."

Decision and Timing:

The Monetary Policy Committee meeting is scheduled from December 3-5, 2025, and RBI Governor Sanjay Malhotra is scheduled to announce the decision of the rate-setting panel on December 5.

Impact of Rate Cut:

Further reduction would undoubtedly strengthen the ongoing growth momentum
May create additional room for adjustment in the economy

Neutral to Dovish Guidance:

Experts believe the guidance is expected to be neutral to dovish, providing an assurance of adequate liquidity and a hint at further scope for rate reduction with evolving growth dynamics.

RBI's Monetary Policy Cycle:

The central bank started its rate-easing cycle in February last year
Cumulatively reduced the repo rate by 100 basis points in successive policy announcements to 5.5%