RBI set to announce policy decision as markets eye potential rate cut

RBI has maintained the benchmark rate at 6.5% since February 2023 after raising it by 250 basis points during its tightening cycle.
| Photo Credit:
FRANCIS MASCARENHAS

The Reserve Bank of India will reveal its monetary policy verdict on Friday morning, concluding a three-day Monetary Policy Committee meeting that commenced Wednesday. Governor Sanjay Malhotra will hold a press briefing at noon, accessible via the central bank’s YouTube channel and official website.

Investors are closely monitoring whether the RBI will reduce the repo rate from its current 6.5% level, with easing inflation trends and potential US Federal Reserve rate adjustments influencing expectations. The central bank has held rates steady since February 2023 following a 250-basis-point increase during its tightening phase.

Recent economic indicators present policymakers with contrasting signals. India recorded 8.2% GDP growth in Q2 of FY2026 – the strongest expansion in six quarters – while October’s CPI inflation moderated to 0.25%. According to SMC Global Securities’ CEO Ajay Garg, “Falling inflation fueled by GST reductions, persistent food-price declines, and moderating core inflation have bolstered expectations for potential rate cuts in early 2026.”

Some analysts maintain a cautious stance. Umesh Sharma of The Wealth Company Mutual Fund observed that recent economic developments post-October have complicated December rate cut forecasts, pointing to robust demand, accelerating credit expansion, and liquidity tightening from forex market interventions.

The upcoming Federal Reserve policy decision on December 9-10 could significantly impact the RBI’s calculus. Bonanza’s Abhinav Tiwari noted that “Fed rate decisions influence India by altering the interest rate differential between the countries,” potentially granting the RBI greater policy maneuverability without prompting foreign capital outflows.

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Published on December 4, 2025