Will RBI cut repo rate again? All eyes on December policy meeting; here's what experts say

As the RBI's Monetary Policy Committee meets, experts are divided on a potential repo rate cut. While strong GDP growth and easing inflation present opposing forces, some analysts believe a cut is possible to support growth. However, others anticipate the central bank will maintain the current rate due to economic resilience. As the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) prepares to unveil its policy decision this week, economists and industry experts are divided over whether the central bank will cut rates or maintain its current stance. The meeting, which begins on Wednesday, has raised curiosity about the central bank’s decision. Here is what the experts say about the possibility and factors surrounding repo rate cut.GDP and inflation - opposing forces at play In the second quarter of FY26, India’s GDP growth rose to 8.2%, prompting some analysts to anticipate a pause in policy action. The momentum might have continued in the third quarter too, on the back of continued rural demand and improved urban consumption. At the same time, prices have also come down. CPI inflation decreased to a series low of 0.25% in October, thanks to lower food prices. This is expected to moderate further and fall below RBI’s own forecast. Mehul Pandya, MD and Group CEO of CareEdge Ratings, noted the opposing forces at play. "Both these developments (of a continued strong GDP growth and multi-year low inflationary levels) are mutually opposing forces from an interest rate perspective. Central banks usually do not tend to cut interest rates during the periods of strong economic activity, represented by GDP growth. At the same time, the central banks usually respond to a low inflationary environment by cutting interest rates," ANI quoted Pandya as saying. He further added that India’s strong growth is a result of ongoing fiscal and structural reforms, but cautioned that global uncertainties and challenging trade conditions with key partners could influence the outlook. "On the balance, the environment does appear conducive for a rate cut next week, though with a limited room for any further expectations for 2026."A room for rate cut Taking a more optimistic stance, Mayur Modi, Co-founder and Co-CEO of Moneyboxx Finance Limited, argued that the record GDP growth provides the RBI with more policy leeway. He said, "With inflation easing to multi-year lows and remaining comfortably within the RBI's tolerance band, the probability of a repo rate cut has strengthened meaningfully. Softening price pressures give the MPC more room to prioritise growth without risking macroeconomic stability. " Modi added that a well-timed cut could support consumption cycles and boost credit demand across sectors. Rohit Arora, CEO and Co-Founder of Biz2X and Biz2Credit, also favoured a supportive approach. "With inflation continuing to ease and financial markets increasingly pricing in a 25-basis point reduction, the upcoming policy review presents a strong opportunity for the RBI to adopt a more supportive stance," he said.No change, says BoB Despite these calls for a cut, a report by Bank of Baroda suggests that the central bank is likely to maintain the repo rate at 5.50% and retain its neutral stance. The report noted that India’s economic performance has remained strong, with GDP growth surpassing expectations. Urban consumption and resilient rural demand are expected to sustain momentum into the third quarter, while private investment is showing signs of recovery, aided by a pickup in credit demand. On the inflation front, the report highlighted a sharp decline in CPI inflation. Core inflation remains above 4%, primarily due to higher gold prices, though benefits from lower GST rates have partly offset this. The report stressed that while the environment allows room for a rate cut, the RBI is likely to proceed cautiously given the strength of growth. Maintaining the current rate would also allow time for the effects of previous cuts to fully filter through the system. The central bank may consider additional monetary support later if tariff-related challenges persist. The MPC is scheduled to meet from December 3 to 5, with the policy decision to be announced on December 5 at 10 AM by RBI governor Sanjay Malhotra. End of Article