RBI's Key Rate Decision: A Cautionary Cut on the Horizon?
The Reserve Bank of India is anticipated to lower policy rates by 25 basis points, as declining inflation creates an opportunity. As the Monetary Policy Committee convenes in Mumbai, discussions focus on balancing growth and inflation, with a potential rate cut seen as a market sentiment booster.
- Country:
- India
The Reserve Bank of India's Monetary Policy Committee (MPC) is expected to cut policy rates by 25 basis points during its upcoming announcement on Wednesday, as reported by Union Bank of India. The diminishing inflation rates have paved the way for what is being termed a 'booster cut' from RBI.
Union Bank's report indicates that the 25bps repo rate cut is based on a significant downward revision of inflation projections for FY26. However, the October MPC meeting's outcome is uncertain, with debates on whether the rate will be cut or maintained.
The MPC starts its three-day session today in Mumbai. A rate cut is expected due to inflation dropping to close to 2.5% with a downward trend, while GST reforms will have a 60bps inflationary impact from October 2025. The communication of the committee's decision is as crucial as the decision itself, according to the report.
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