The next monetary policy meeting is scheduled for December 3-5, 2025. According to an SBI Research report on Sunday, expectations built over the past few days for a shallow 25-basis-point rate cut appear to have faded, as finer readings of the strong Q2 growth print and the evolving playbook tilt the balance in favour of a pause in December monetary policy.
“Expectations built till a few days back of a shallow rate cut of 25 bps appear to have faded as finer readings of the strong Q2 growth print and the evolving playbook make the choice tilted in favour of pause in December policy,” the report read.
According to the SBI report, the broader trend is that monetary policy has entered a phase of pause with differences across geographies. But, the report also suggested that it is important to continue with decisions beyond direct rate actions, but towards affirmative actions outside policy space.
In the October policy meeting, the committee of RBI kept the policy repo rate unchanged at 5.5% in a unanimous decision. The RBI governor Sanjay Malhotra noted that headline inflation had moderated considerably, providing the MPC with confidence to maintain the rate stance.
The RBI had, in its last meeting, revised the inflation target for the current financial year to 2.6%. This announcement marked a significant moderation from earlier projections of 3.1%. In the August policy meeting as well, the inflation target was revised downwards to 3.1%, down from 3.7% projected in June.As per the RBI Governor, this improvement in inflation has mainly been driven by a sharp decline in food prices and the rationalisation of Goods and Services Tax (GST) rates, that was announcement by Prime Minister Narendra Modi on Independence Day.
Inflation had been a rising concern for many countries, including advanced economies. However, India, being a developing country, has largely managed to steer its inflation trajectory in a favourable direction. The RBI held its benchmark repo rate steady at 6.5% for the eleventh consecutive time, before cutting it for the first time in about five years in February 2025.