Overview

• SBI Research calls a 25 basis-point reduction the best option now and says any move would need calibrated RBI communication.
• The policy rate stands at 5.50% after earlier 2025 cuts, with an August pause; the MPC meets on Sept. 29–30 and announces on Oct. 1.
• The report estimates CPI could fall a further 65–75 bps from GST rate changes, with an additional 20–30 bps moderation from the new CPI series.
• October CPI could print around 1.1%, the lowest since 2004, with inflation expected near the lower end of the 2–6% target in FY26–FY27.
• SBI warns against a ‘Type 2 error’ of inaction and notes the need to guide markets as global yields harden and transmission remains in focus.