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5h ago

RBI MPC Minutes Open Door to Future Rate Cuts, Emphasize Caution on Timing

Benign inflation gives the RBI room to support growth without immediate action.

A man walks past a logo of the Reserve Bank of India (RBI) and the Indian Rupee inside the RBI headquarters in Mumbai, India, December 6, 2024. REUTERS/Francis Mascarenhas/File Photo
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Overview

  • The repo rate was held at 5.50% with a neutral stance, and two members sought a shift to accommodative to signal readiness to ease.
  • Headline CPI fell to an eight-year low of 1.54% in September, and the RBI lowered its FY26 inflation forecast to 2.6%.
  • The growth outlook was raised to 6.8% for FY26 after a stronger-than-expected 7.8% expansion in Q1 and continued momentum in Q2 indicators.
  • The committee warned that further easing now risks an "overdose" because the 100 bps of cuts already delivered this year are still transmitting.
  • Members flagged U.S. tariff and visa measures, outsourcing curbs and a steep pharma tax as headwinds, with GST 2.0 and fiscal steps offering partial cushioning, and the next review on Dec. 3–5 seen by economists as a possible window for a 25–50 bps cut.