Will RBI cut repo rate in the upcoming Monetary Policy Committee Meet?

Monetary policy is a framework used by a nation’s central bank, like the RBI, to regulate the economy by adjusting tools such as interest rates and money supply. Its goals are to maintain price stability, support economic growth, and ensure financial stability. A key instrument is the repo rate, the rate at which the RBI lends to commercial banks and the changes in the repo rate influence borrowing costs, affecting spending, investment, and overall economic activity.

RBI Monetary Policy Schedule

The RBI usually conducts the MPC meeting every two months, leading to six meetings in a financial year. During these meetings, the MPC reviews interest rates, money supply, inflation outlook, and several other macroeconomic metrics.

The upcoming RBI’s Monetary Policy Committee (MPC) meeting starts on December 03, 2025, and will end with an announcement on December 05, 2025. Market participants are eagerly waiting for Governor Malhotra’s views on the country’s economic growth and inflation. 

Will the RBI change its policy stance?

In the previously held 57th meeting of the Monetary Policy Committee held from September 29 to October 1, 2025, the RBI kept the repo rate unchanged at 5.50% with a neutral stance.

The monetary policy stance reflects the RBI’s policy direction, and it does not always depend on whether the repo rate is actually cut or hiked in that meeting. 

For example, an accommodative stance signals the RBI is willing to support growth and can cut rates if needed, while a tightening or withdrawal-of-accommodation stance indicates a focus on controlling inflation and makes rate hikes more likely. A neutral stance means the RBI can move either way depending on data. So the stance shows the RBI’s future policy bias, not just the immediate rate action.

Types of stance:

Accommodative Stance: RBI is focused on supporting growth and is willing to cut interest rates (repo rate) or keep them low.

Neutral Stance: RBI is balanced between controlling inflation and supporting growth.

Tightening (or Hawkish) Stance: RBI prioritises controlling inflation and is more likely to increase interest rates.

Expected Repo Rate Cut

RBI has lowered the repo rate by 100 basis points since February but held steady in October. Now it expects that the Reserve Bank of India will cut its key interest rate by 25 basis points to 5.25% on December 5, according to a majority of economists polled by Reuters who expect the rate to stay there through 2026.

A sharp fall in food prices and tax cuts on consumer goods drove India’s consumer inflation to a record low of 0.25% in October, giving the central bank room to support weak consumption despite renewed pressure on the rupee.

RBI Governor Sanjay Malhotra said this week that the latest economic data indicate there may still be room for interest-rate cuts. The central bank has kept rates unchanged since August, following a total reduction of 100 basis points in the first half of the year.

Along with it, Morgan Stanley also expects the Reserve Bank of India to lower the repo rate by 25 basis points at its December 2025 policy meeting, citing what it calls repeated downside surprises in headline CPI inflation.

Written by Sridhar J 

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