RBI Monetary Policy Committee Meeting Begins, Markets Eye Repo Rate Decision

The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) has commenced its three-day meeting in Mumbai today. The members will review the state of the economy and decide whether to adjust the repo rate, which currently stands at 5.5%. The outcome will be announced by RBI Governor Sanjay Malhotra on Wednesday, October 1, at 10 AM.

Markets, businesses, and policymakers are watching closely, as any change in the repo rate can influence borrowing costs, investment sentiment, and overall economic activity. In August, the MPC voted unanimously to keep the repo rate unchanged at 5.5%. Since February this year, the RBI has already cut rates by 100 basis points before pausing in August.

RBI repo rate decision

Why Experts Expect a Pause

Many analysts predict that the RBI may maintain the current rate rather than announce a cut.

Vinayak Magotra, Product Head at Centricity WealthTech, noted: “We expect RBI to maintain a pause on the rate cuts in the upcoming Monetary Policy meeting. The recent GST rationalisation is expected to provide a short-term boost to consumption, especially ahead of the festive season.”

He highlighted factors such as surplus liquidity in the banking system, a better trade balance, and strong growth numbers as reasons for caution. “Growth forecasts for FY26 are maintained at 6.5%, and recent quarterly real GDP shows 7.8%, underscoring confidence that there are no immediate downside risks. Meanwhile, the downward revision of CPI for FY26 from 3.7% to 3.1% provides additional policy flexibility,” he added.

Conversely, a State Bank of India report suggests that a 25 basis points cut could be appropriate at this stage. The report argues that inflation is under control and likely to ease further, tracking below 2% for September and October even without additional GST reductions. Analysts see this as a potential opportunity for the RBI to stimulate economic activity while inflation remains contained.

As the MPC deliberates, investors and businesses await the announcement, which could shape borrowing, spending, and market trends for the months ahead.