Come on October 1, it will be a decision time for the Tarief Panel of the Reserve Bank of India, with continuation of the status quo and a repo rate reduction that is just likely to be the results in the background of the retail inflation, far below the target and growth time for collecting growth moments.
It will be a difficult choice for the six -member Monetary Policy Committee (MPC) when they meet between September 29one until October 1star For the current financial year 4one bi -monthly monetary policy evaluation.
The 50 percent rates for Indian export, raising the application costs for H-1B visa to $ 100,000, and the proposed step to impose 100 percent rates on branded and patented export of pharmaceutical exports could have growth resources for the country. This can justify a reduction in a repo rate to support growth.
However, with a GDP growth that is picked out in the first quarter (JOJ) of 7.4 percent in the previous quarter in the previous quarter in the first quarter (Q1FY26), however, there may be a case for maintaining a status quo at the Repo-Reppo speed.
The MPC has cumulatively reduced the repo rate (the interest rate with which the liquidity offers to the banking system to overcome liquidity masses in the short term) with 100 basic points (BPS) since February 2025 to 5.50 percent. The committee gave this rate and continued with the “neutral” monetary policy position during its last meeting in August.
Rating Agency ICRA expects the MPC to maintain the status quo on the Repo rate. The position is supported by the positive impact of GST reforms on demand, stronger-this expected Q1FY2026 BDP growth and an inflation process that (although lowered by GST rationalization, with FY2026 on average now 2.6 percent), is expected to go up afterwards.
Aditi Nayar, Chief Economist, ICRA, noted that the GST rationalization could dampen the Headline CPI prints with 25-50 Basic Points during Q3 FY2026-Q2 FY2027 period compared to the pre-gst rationalization estimates of the agency 3,0.0.0.0.026 tot.
While October-November 2025 marks a fresh layer for CPI inflation, the route then remains upwardly sloping, she added.
The Headline CPI inflation increased in August to 2.1 percent (1.6% in July) after nine consecutive months.
Nayar was of the opinion that GST rationalization is unambiguously set for moderate inflation, but this is the result of a policy change and is likely to be accompanied by a stronger question. This suggests a status quo for the Repo tariff in the policy evaluation of October 2025, in what seems to be a good call.
Radhika Rao, senior economist, DBS, noted that against the background of the strong growth of more than 6.5%, tax levers are being tapped to stimulate demand, inflation is gradually on its way and the rupid under pressure, the repo speed is expected, the repo percentage will be left unchanged.
She said that there is room for the increase of 20-30 bps in the official FY26 growth food spelling (of 6.5 percent) and a downward revision of a similar size of inflation (projection of 3.1 percent).
However, ICRA is aware of fresh tariff stages and risks for growth, has a probability of 30 percent for a reduction, if the RBI sees reason when loading action. Although the agency is of the opinion that Dovish Talk will achieve the desired result.
SBI’s economic research department, in a report, said that a reduction of 25 BPS in the coming bi -monthly monetary policy review is the best possible option for RBI. But this requires calibrated communication from the central bank as after June, the bar for the interest reduction is indeed higher.
“There is a merit and reason to go a rate reduction in September … But it makes no sense to commit a type 2 error again (no rate reduction with a neutral position) by not reducing the rates in September, because inflation even remains benign in FY27 and without a GST section, it follows below 2 percent in September and October.
“CPI FY27 figures now follow 4 percent or less, with GST rationalization, October CPI can be closer to 1.1 percent … The lowest since 2004,” said Economists in a report.
Published on September 28, 2025
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