Overview
- The MPC lowered the repo rate by 25 basis points in December to 5.25% after judging inflation had become benign.
- ICICI Bank expects an extended pause, saying further easing would require inflation to consistently undershoot the current trajectory and follow a reassessment after new CPI and GDP series arrive.
- Union Bank of India sees scope for one final 25 bps reduction to 5.0% in February or April 2026, while stressing timing uncertainty tied to February’s base-year revisions.
- December minutes showed the RBI raised its FY26 GDP forecast to 7.3% and cut its CPI projection to about 2.0%, even as members flagged potential growth moderation in H2 FY26.
- The RBI has cut rates by a cumulative 125 bps in 2025 and signaled it will keep liquidity comfortable to support transmission as the February MPC meeting becomes the next focal point.