GoodReturns Poll: RBI To Pause On Rate Cut In October Policy, Repo Rate Seen Steady At 5.5%

The Reserve Bank of India (RBI) is expected to keep its interest rate steady at 5.50% during the Monetary Policy Committee (MPC) meeting on October 1, 2025, according to a poll conducted by Goodreturns. Out of 30 economists surveyed, 17 anticipate no change in the repo rate, while 13 expect a rate cut, mostly by 25 basis points.

Most Economists Expect RBI to Hold Repo Rate at 5.50% in October 2025 MPC Meet

Despite having some room to lower rates, experts remain cautious due to potential growth risks from US tariffs, resulting in a majority expecting the RBI to maintain its current stance for the rest of the year.

Canara Bank's Chief Economist Madhavankutty G ruled out the possibility of a rate cut, stating that "the RBI has already made its stance very clear that monetary policy has only a limited impact on pushing the growth rate." He further pointed out that private capex remains sluggish, attributing it to "fairly stagnant wage growth" and "concerns about job stability."

RBI Rate Cut Expected Amid Inflation Easing and GST Impact

However, several economists anticipate a small cut of 25 basis points, with a few predicting a slightly larger reduction of 25 to 50 basis points.

"A 25 bps rate cut in September is the best possible option for RBI," according to an SBI Research note, which highlights that inflation may not have bottomed out yet and could decline further by 65-75 basis points due to significant GST rationalisation. The note adds that inflation is likely to remain below 4% through FY27, with October CPI potentially dropping to 1.1%, the lowest since 2004.

"The RBI is likely to carefully calibrate its October 1 decision, with a 25-bps repo rate cut being a strong possibility. GST reforms are easing input costs, providing room to stimulate growth. While an additional cut could pressure the rupee, it is crucial for supporting domestic consumption and investment. Ignoring these growth signals could slow momentum in key sectors. The test for the central bank is to walk the tightrope between controlling inflation and promoting economic growth, and any action this month would demonstrate a strong resolve to maintain India's growth path," said Siddharth Maurya, Founder & Managing Director, Vibhavangal Anukulakara.

GDP Outlook Remains Steady at 6.5%

Retail inflation has remained consistently below the Reserve Bank of India's 4% target for seven consecutive months, registering at 2.7% in August. Concurrently, the economy exhibited robust growth, expanding at a stronger-than-anticipated rate of 7.8% during the April-June quarter.

The central bank is anticipated to revise its Consumer Price Index (CPI)-based inflation projection for the fiscal year 2025-26 downward from the earlier estimate of 3.1%. Meanwhile, It is expected to maintain its GDP growth forecast for the same period at a steady 6.5%.

"With inflation remaining below 2% and GST reform reducing retail prices, the RBI has an open opportunity to reinforce economic momentum. A 25 basis point rate reduction will be a cautious response that will continue to fuel demand while keeping borrowing affordable for consumers while keeping financial stability intact," said Pramod Kathuria, Founder & CEO at Easiloan.

Will US Fed rates cut impact RBI repo rate cut decision?

With CPI inflation currently well within the Reserve Bank of India's 4% target, a 25 bps rate cut by the U.S. Federal Reserve could prompt the RBI to follow with a similar 25 basis point reduction in the repo rate. According to Kruti Chetta, Fund Manager & Fixed Income Analyst at Mirae Asset Investment Managers, a Fed rate cut would provide the RBI with greater flexibility to ease rates domestically.

In its August policy review, RBI opted to maintain the status quo on interest rates, following a cumulative reduction of 100 basis points between February and June.

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