The Monetary Policy Committee (MPC) of the Reserve Bank of India (MPC), led by governor Sanjay Malhotra, started the three-day meeting (from September 29 to October 1) today, against the background of current geopolitical tensions and the American Trump rates.
The American Federal Reserve recently announced a reduction in risk management.
An SBI report proposed a speed of 25 BPS and described it as the “best possible option” for the RBI. However, some experts believe that the panel could maintain the status quo in the coming bi-monthly policy, which will be announced on 1 October.
Nuvama Institutional shares noted that a rate reduction will be a accurate conversation.
Bajaj Broking noted that the street largely expects the central bank to maintain the REPal rate at 5.50 percent, keeping the level in August 2025 after a reduction of 50 BPS in June.
In the meantime, a report from the Union Bank of India emphasized that is a baseline display of a speed reduction of 25 BPS in this meeting. “The view is based on another round of sharp downward revision of the inflation projection for FY26,” said it.
Inflation trends
The domestic inflation of the consumer price rose to 2.07 percent in August 2025 from 1.61 percent in July, the first increase in 10 months. Despite the increase, inflation remains far below the target of 4 percent of RBI and within the prescribed tolerance bond. Analysts largely attribute the rise to higher food prices.
It is expected that recent GST reform measures will further relieve retail prices, which means that inflation is possible in the short term, Bajaj Broking mentioned. However, economists warn that the global fluctuations of the raw material prize and domestic demand pressure could lead the inflation higher in the coming months.
“While the tax reduction consumes matte support, slower government spending in the midst of lower taxing and the resistance of rates could compensate,” Nuvama reported, with the argument that the RBI will probably start relieving later this year.
Outlook
The Indian economy yielded a growth of 7.8 percent in the quarter of June, which exceeds expectations. Government spending has been an important engine of this expansion, while private investments remain relatively modest. At the external front, uncertainties such as US trade rates and geopolitical tensions can be challenges for future growth.
Liquidity and forward guidelines
The RBI implemented liquidity support measures in September 2025, including a reduction of Kas Reserve -Ratio (CRR), aimed at facilitating economic activity. Nevertheless, the loan costs remain relatively increased, in particular for central and national governments.
Bajaj Broking emphasized that the RBI is expected to adopt a neutral attitude in its forward guidelines, so that the growth motifs with price stability are balanced.
Published on September 29, 2025
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