Mumbai: The Reserve Bank of India’s Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, is set to announce its next interest rate decision on October 1, and economists are divided on the outcome. While the majority expect the repo rate to remain steady at 5.5%, a notable group predicts a 0.25% cut could be on the cards, especially amid India’s slowing growth due to rising U.S. tariffs.
Inflation in India remains comfortably within the RBI’s target range of 2–6%, aided by recent tax cuts and a strong monsoon. August saw inflation at just 2.07%, with annual averages projected around 2.7%, giving the RBI some room to lower borrowing costs to spur economic growth.
The economy is expected to grow around 6.5% this year, but external risks loom large. President Trump’s 100% export tariffs could hit Indian exporters hard. Some economists argue that a modest rate cut could cushion this impact, while others caution that the RBI may stay patient, having already reduced rates by 100 basis points earlier this year.
