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
Market participants are closely watching whether the RBI will cut the repo rate from its current 6.5 per cent, amid easing inflation and expectations of a US Federal Reserve rate cut next week. The central bank has maintained the benchmark rate at 6.5 per cent since February 2023 after raising it by 250 basis points during its tightening cycle.
Recent economic data presents a mixed picture for policymakers. India’s GDP grew 8.2 per cent in the second quarter of fiscal 2026, the fastest pace in six quarters, while CPI inflation dropped to 0.25 per cent in October. “Easing inflation driven by GST rate cuts, sustained food-price deflation, and a steady decline in core inflation have strengthened hopes that the RBI may prepare the ground for a rate cut in early 2026,” said Ajay Garg, CEO of SMC Global Securities.
However, some analysts urge caution. “Recent data after the October MPC meeting has made the outlook for a December rate cut trickier to forecast,” noted Umesh Sharma of The Wealth Company Mutual Fund, citing strong demand, rising credit growth, and tight system liquidity due to forex intervention.
The potential Fed rate cut on December 9-10 could influence the RBI’s decision. “A Fed rate cut matters for India because it narrows the interest rate gap between the two countries,” explained Abhinav Tiwari of Bonanza, adding that this gives the RBI more flexibility to adjust policy without triggering foreign investor outflows.
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Published on December 4, 2025
