The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has commenced its three-day meeting, with the outcome to be announced by RBI Governor Sanjay Malhotra on October 1, 2025. The committee will be deliberating on a range of crucial issues, including potential rate revisions, policy changes, the country’s future growth outlook, and the impact of global geopolitical issues. These factors are all being carefully considered as the committee formulates its path forward.
While the markets are anticipating the decision, a consensus is forming around a continuation of the current policy. According to the broking firm Bajaj Broking, Dalal Street largely expects the RBI to maintain the repo rate at 5.50% (unchanged), citing subdued inflation and potential risks to growth.
This expectation stems from the MPC’s previous meeting in August 2025, where the repo rate was held at 5.50% following a 50-basis point reduction in June 2025. This stance suggests that the RBI may be prioritizing stability and monitoring the effects of recent policy changes before making further adjustments. The central bank may also be weighing the potential impact of global uncertainties, such as fluctuating commodity prices or geopolitical tensions, which could affect India’s economic growth and inflation trajectory.
A pause in rate cuts could have a direct impact on various financial instruments. For instance, term deposits are likely to be affected, as banks may adjust their interest rates in response to the RBI’s decision.
However, the effect on home loan borrowers may not be as severe. A stable repo rate would prevent an immediate increase in their Equated Monthly Installments (EMIs), allowing them to maintain stable financial plans and budgets. Any benefits from previous rate cuts would continue to be passed on to them by banks, providing ongoing relief.
The RBI has already implemented a total of 100 basis points in rate cuts since February 2025. This series of reductions has been aimed at stimulating economic growth and making credit more affordable. The upcoming policy announcement on October 1 will provide clarity on whether the central bank believes the economy requires further monetary easing or if it is on a self-sustaining path of growth.
The decision is a complex balancing act, with the Governor needing to weigh the need for growth against the imperative of controlling inflation. Given the strong performance of the economy and the positive impact of previous reforms, the MPC’s decision will be a crucial indicator of the RBI’s confidence in the nation’s economic resilience.
