The RBI’s Monetary Policy Committee begins its three-day review on December 3, with RBI Governor Sanjay Malhotra set to announce the decision on December 5. Experts are split between expecting a 25 bps rate cut and a status quo, as India’s GDP surged 8.2% in Q2 and inflation dropped to a multi-decadal low of 0.25%.
The RBI began easing rates last year, reducing the repo rate by 100 bps to 5.5% before pausing in August. Some economists argue the pause may continue due to strong growth supported by fiscal consolidation and reforms. Others say subdued inflation offers room for a 25 bps cut.
Reports from HDFC Bank and Crisil highlight that inflation undershooting and stable growth could justify another cut. SBI Research says the RBI must clarify the rate trajectory while maintaining a neutral stance. However, experts from Bank of Baroda and ICRA expect no change, citing forward-looking inflation trends staying near 4%.
Guidance is expected to be neutral or slightly dovish, with liquidity assurances.
