RBI has kept the possibility of future tariff reductions open: report

On October 1, RBI had kept its policy interest at 5.5% unchanged for the second consecutive time, stating concern about the rate of uncertainties. | Photocredit: Francis Mascarenhas

The Reserve Bank of India (RBI) has kept the possibility of future tariff reductions open, whereby its Monetary Policy Committee (MPC) is revised its inflation forecasts downwards according to a recently report from Crisil Intelligence.

On 1 October, the Central Bank had kept its policy interest unchanged for the second consecutive time, stating concern about the rate of uncertainties.

The report said that the MPC acknowledged that the growth of GDP in the second half of the current financial year (2025-26) would be confronted in the second half of the current financial year because of the impact of American rates.

However, the recent rationalization of GST rates will partially compensate for the overall impact, said Crisil Intelligence.

“Certain labor -intensive sectors are the most vulnerable for the impact of American rates and need policy support. Because inflation becomes a lesser care, the initiation of the tariff reductions of the American Federal Reserve room for the RBI to reduce RBI,” the report said.

Since February 2025, the RBI has reduced the policy percentage with 100 basic points. In his earlier policy assessment in June, it had tried the Repo rate with 50 basis points to 5.5 percent.

The Central Bank has commissioned the government to ensure that the consumer price index (CPI) -based store inflation remains at 4 percent with a margin of 2 percent on both sides.

Based on the recommendation of the MPC, the RBI reduced the Repo rate each with 25 BPS each in February and April, and 50 basic points in June in the midst of the release of retail -inflation.

Shopping inflation has been trending below 4 percent since February of this year. In August it relieved a lowest point of six years of 2.07 percent, helped by a reduction in food prices and a favorable basic effect.

Published on October 4, 2025