Overview

• The MPC kept the repo rate at 5.5% in early October but flagged space to support growth after CPI fell to about 1.5% in September, an eight-year low.
• Goldman Sachs expects a further 25 bps reduction before year-end, citing dovish RBI guidance and the GST simplification as signals that peak fiscal consolidation has passed.
• The firm says recent RBI steps should ease supply-side credit constraints, though incremental lending will depend on private demand and investment traction.
• RBI’s October bulletin raised the FY26 growth forecast to 6.8% and highlighted resilience supported by low inflation and strong bank and corporate balance sheets.
• External pressures remain, with steep U.S. tariffs and higher H‑1B costs weighing on exporters and IT services after a sharp drop in shipments to the U.S. in September.