Group 1 - The Reserve Bank of India (RBI) kept the policy repo rate unchanged at 5.50% during the recent Monetary Policy Committee (MPC) meeting, indicating potential for future rate cuts to support growth [3][6] - The MPC's language has shifted, suggesting that the "sobering of inflation" provides more leeway for monetary policy adjustments, contrasting with previous statements about a benign inflation outlook [5][7] - Economists predict a possible reduction in the repo rate to 5% by February, contingent on tariff rates and domestic consumption trends, with a conditional December cut being emphasized [6][7] Group 2 - The RBI has revised down its growth projections for Q3 and Q4 FY26, citing risks to growth momentum in the second half of FY26 [5][7] - If tariff risks diminish and global growth among major trading partners remains stable, there could be an upside bias to the FY26 GDP forecast, currently estimated at 6.6% [6][7] - The upcoming trade deal between India and the US, along with the impact of GST cuts on demand, are critical factors to monitor for future monetary policy decisions [6][7]
Trump and tariffs could decide the course of RBI rate revision
The Economic Times·2025-10-02 19:16