The Reserve Bank of India (RBI) has begun its three-day monetary policy committee (MPC) meeting today, December 3. The
central bank will evaluate if the present economic conditions justify a rate cut or whether the RBI should hold off a
bit longer before easing policy.
In its October meeting, the MPC left the repo rate unchanged at 5.5% for the fourth consecutive time. RBI Governor
Sanjay Malhotra noted that inflation had cooled significantly, allowing the committee to hold its stance.
With economic growth strengthening and price pressures continuing to ease, focus has now shifted to whether the December
review might signal the beginning of a rate-cut cycle.
The MPC has cut the key policy rate by a total of 100 basis points this year — from 6.5% to 5.5% — before pausing
further reductions in August.
Will RBI announce a rate cut?
According to market experts, RBI is unlikely to deliver a rate cut in the upcoming policy announcement on Friday,
“We expect the RBI to stay on a pause in December and keep rates and stance unchanged. Space for incremental rate cuts
by the RBI is limited,” said Yes Bank Ecologue in a note.
Sugandha Sachdeva- Founder-SS WealthStreet, believes that the strength in domestic growth, buoyant consumption patterns,
and improving sentiment suggest that the economy is currently on a firm footing.
“Despite having space to cut rates, the RBI is not under any immediate pressure to deliver additional easing at this
meeting. This reduces the urgency for a near-term rate reduction. Moreover, the surprisingly strong second-quarter GDP
numbers may, in fact, deter the central bank from acting too soon, as premature easing could risk overstimulating an
already vigorous economy,” Sachdeva said.
However, the central bank is likely to keep the doors open for a possible 25bps cut in the last quarter of this fiscal
if conditions warrant, Sachdeva added.
According to Sachdeva, RBI is likely to revise its inflation forecast downward, with CPI likely to average around 2% for
FY26 and a modest 3.9% for FY27, well within its comfort band.
Headline CPI inflation dropped to a low of 0.25% in October, lowest y-o-y inflation in the current CPI series and well
below the RBI’s medium-term target of 4%.
“Overall, while the domestic environment supports further easing, the RBI is expected to balance growth optimism with
the need to preserve stability amid global risks, signalling a cautious but accommodative policy path ahead,” she added.
Meanwhile, Yes Bank Ecologue said in the report that the growth has turned out to be stronger than expected, coming in
Early high-frequency indicators for October show that the momentum has persisted across both manufacturing and services,
helped by GST reductions, monetary easing, festive demand, and other supportive factors. However, a few recently
released indicators—such as the Manufacturing PMI and IIP—have shown some softening.
The firm further noted that some slowdown in growth can be expected as lower nominal GDP pulls down tax numbers and can
impact expenditures of the central government.
The bank estimates H2FYGDP growth at 6.7% (8.0% in H1FY26) and for the full year FY26 at 7.4%. It expects RBI to improve
the GDP forecast to 7.0-7.2% (current estimates at 6.8%).
“Capital expenditure of the Centre is likely to weaken as there has been a significant front-loading of the expenditures
in H1FY26. Pace of private consumption demand can also wean off as the impact of the GST-led demand boost wears off. The
drag to growth will also come from higher trade deficits as the US-India trade deal is not yet finalised,” the bank
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