Informist Poll
Most see MPC cutting repo rate Oct amidst tariff uncertainty
This story was originally published at 21:27 IST on 6 August 2025
Register to read our real-time news.Informist, Wednesday, Aug. 6, 2025
By Shubham Rana and Pratiksha
MUMBAI – The Reserve Bank of India's Monetary Policy Committee may lower the repo rate once again in October, after leaving it unchanged at 5.50% Wednesday, to support growth amidst an uncertain global environment, according to an Informist poll.
Of the 23 economists and market participants polled after Wednesday's interest rate decision, nearly 70% said they see a possibility of a rate cut in the December quarter, with nearly 40% expecting a cut in October. Only seven poll respondents said the MPC is unlikely to lower interest rates further. The MPC will next meet on Sept 29-Oct 1.
The MPC has lowered the repo rate by 100 basis points between February and June to 5.50%. On Wednesday, it left the repo rate unchanged and retained the neutral policy stance.
RBI Governor Sanjay Malhotra said that the current macroeconomic conditions, outlook, and uncertainties call for continuation of the policy repo rate. He said that the MPC will wait for further transmission of the frontloaded rate cuts to the credit markets and the broader economy.
The RBI lowered its CPI inflation forecast for 2025-26 (Apr-Mar) by 60 bps and retained the GDP growth projection of 6.5%. The central bank's growth forecast is higher than that of economists, who see growth around 6.2-6.3%.
"With the sharp downward revision of CPI inflation estimate, we believe the RBI MPC has maxed out on the room to witness any more surprises," Barclays said in a report. "However, on growth, we expect the incoming data to fall short of RBI's 'resilience' expectation. Accordingly, we expect the RBI MPC to deliver a final cut of 25 bps in October."
Risks to the growth forecast have also risen. Hours after Malhotra announced MPC's decision Wednesday, the US said it will impose an additional 25% tariff on import of goods from India for its oil trade with Russia. The US has already levied 25% reciprocal tariff on India, which economists project could hit GDP growth by 20-30 bps.
"Overall, our assessment is that RBI is likely too optimistic on its growth forecasts and by the same logic we also see RBI's inflation forecasts likely implying too strong demand-pull-related inflation," MUFG Bank Senior Currency Analyst Michael Wan said in a report. MUFG Bank sees the MPC opting for 25 bps rate cuts in October and December each.
However, not everyone expects more policy easing. Some economists said that monetary policy transmission of the 100-bps rate cuts so far is still incomplete and there is no urgency to ease further. "While in the current uncertain economic landscape, there is nothing called a zero-probability event, we think that the bar for any further rate cuts is high, and any further easing of monetary policy could be on the back of undershoot to growth expectations, given the tariff hit on India," economists at YES Bank said in a report.
The following are the expectations of economists and market participants on future interest rate cuts:
| ORGANISATION | NEXT RATE CUT EXPECTATION |
| ANZ Bank India | 25 bps cut in Oct |
| Bank of Baroda | Rate cut possible in Oct-Dec |
| Barclays | 25 bps cut in Oct |
| Capital Economics | No more rate cuts |
| CareEdge Ratings | No more rate cuts |
| Crisil | One more cut in FY26 |
| Goldman Sachs | 25 bps cut in Oct-Dec |
| HDFC Bank | No more rate cuts in FY26 |
| HSBC | 25 bps cut in Oct-Dec |
| ICICI Bank | No more rate cuts |
| IDBI Bank | 25 bps cut in Oct |
| IDFC FIRST Bank | 25 bps cut in Oct |
| India Ratings and Research | Scope for 50 bps cuts |
| IndiaFirst Life Insurance | Further rate cut unlikely |
| Invesco Mutual Fund | Rate cut possible in Oct-Dec |
| Morgan Stanley | Rate cut likely in Oct |
| MUFG Bank | 25 bps cut each in Oct, Dec |
| Nirmal Bang Institutional Equities | Scope of 25-50 bps more cuts |
| PGIM India Mutual Fund | 25 bps cut in Oct |
| Standard Chartered | No more rate cuts in FY26 |
| UBS Securities | 25 bps cut in Oct |
| YES Bank | Bar for rate cut high |
| YES Securities | 25 bps cut in Oct |
End
Edited by Deepshikha Bhardwaj
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