RBI MPC 2025: Malhotra & co. expected to favour repo rate pause after robust Q2 GDP numbers, says SBI Research

Reserve Bank of India Likely to Maintain Repo Rate

The Reserve Bank of India (RBI) may keep the repo rate unchanged at its upcoming December monetary policy review meeting, given the country's strong GDP growth in the July-September quarter.

Upcoming Monetary Policy Committee Meeting

The next Monetary Policy Committee (MPC) meeting is scheduled for December 3-5, 2025.

Strong GDP Growth Supports Repo Rate Decision

The country's economy reported a strong 8.2 percent GDP growth in the July-September quarter, supporting the RBI's decision to maintain the repo rate.

Expectations for Rate Cut Diminished

• Expectations for a shallow rate cut of 25 bps have faded
• Finer readings of the strong Q2 growth print have shifted the balance in favour of a pause in December policy

Monetary Policy Enters Phase of Pause

According to an SBI Research report, the broader trend is that monetary policy has entered a phase of pause with differences across geographies.

Importance of Decisions Beyond Rate Actions

The SBI Research report suggested that it is important to continue with decisions beyond direct rate actions, but towards affirmative actions outside policy space.

RBI Maintains Policy Repo Rate at 5.5 Percent

In a unanimous decision, the Monetary Policy Committee (MPC) of the RBI kept the policy repo rate unchanged at 5.5 percent in its October policy announcement.

Inflation Moderation Provides Confidence

The RBI governor noted that headline inflation had moderated considerably, providing the MPC with confidence to maintain the rate stance.

Revised Inflation Target for Current Financial Year

The RBI had, in its October meeting, revised the inflation target for the current financial year to 2.6 percent, marking a significant moderation from earlier projections of 3.1 percent.