The Reserve Bank of India’s Monetary Policy Committee (MPC) is scheduled to announce its policy decision on December 5, 2025. The repo rate currently stands at 5.50 percent, with a neutral policy stance. In October 2025, the MPC adopted a dovish tone, citing GDP growth below target and signaling room for a potential rate cut. However, recent data has altered market expectations. India’s Q2FY26 GDP surged to 8.2 percent, surpassing the RBI’s 7 percent forecast and the market median of 7.3 percent, driven by 7.9 percent growth in private consumption and favorable base effects. Nominal GDP growth was more modest at 8.7 percent, reflecting a lower deflator.
Inflation remains subdued, with headline CPI falling to 0.25 percent in October and food inflation at -5.02 percent, while core inflation was 4.4 percent. Surplus liquidity of Rs 1.45 lakh crore and forex reserves of $688 billion provide further stability. Despite robust growth arguing against a rate cut, low inflation and comfortable liquidity support easing. Considering domestic and global factors—including Fed rate cuts and a weaker rupee—there is an estimated 50 percent chance of a 25 bps repo rate cut, likely maintaining a neutral stance.