Informist Poll
Most see MPC keep status quo in Feb as rate cut cycle nears end
This story was originally published at 20:52 IST on 5 December 2025
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By Pratiksha and Shubham Rana
MUMBAI – There is divergence among economists and analysts about the future trajectory of interest rates after the Reserve Bank of India's Monetary Policy Committee slashed rates by 25 basis points Friday, according to an Informist poll.
With inflation below target, growth seen moderating, and 125 bps of policy easing already in place this year, the MPC is seen near the end of its rate cut cycle, economists said, adding that the panel can at most lower the repo rate by only 25 bps from the current 5.25%.
Of the 21 economists, market participants, and analysts polled after Friday's interest rate decision, nearly 60% said they expect the MPC to hold rates in February. Only five participants polled said they see a 25-bps rate cut on Feb. 6, which would be the last of the cycle that began in February this year.
The MPC lowered the repo rate Friday, after leaving it unchanged over the last two meetings, and retained the neutral policy stance for the third consecutive meeting. The rate-setting panel has now lowered the repo rate by a total of 125 bps in the current policy easing cycle, the most in a calendar year since 2019.
RBI Governor Sanjay Malhotra said the growth-inflation balance, especially the benign inflation outlook on both headline and core, continues to provide the policy space to support the growth momentum. "The MPC noted that headline inflation has eased significantly and is likely to be softer than the earlier projections, primarily on account of the exceptionally benign food prices," he said.
Poll respondents, who see room for more easing, attributed benign inflation and slowing growth outlook as the primary reason. "Inflation outlook is largely optimistic with continued moderation in food prices and rangebound core inflation," Aditi Gupta, economist at Bank of Baroda, said in a report. "On the other hand, growth prospects though bright, face some pressures due to the drag from higher US tariffs."
The RBI has lowered its headline inflation projection for 2025-26 (Apr-Mar) by 60 bps to 2.0%. It sees inflation at 2.9% in the March quarter and 3.9% in Apr-Jun FY27. While growth remains resilient, Malhotra said it is expected to "soften somewhat". The central bank raised its GDP growth projection by 50 bps to 7.3% for FY26.
At the post-policy press conference, Malhotra said that interest rates are expected to stay low going ahead with inflation staying benign. Malhotra stopped short of giving explicit guidance for future rate actions, saying MPC will go "policy by policy" and be data-dependent. "What rate it will be, that will be getting into speculation," Malhotra said.
Malhotra's comments and the retention of the neutral stance suggests "we are nearing the end of the rate-cut cycle", IDFC FIRST Bank Chief Economist Gaura Sen Gupta said in a report. "We expect a status quo in the February policy, as forward-looking inflation rises to 4% in H1FY27 (Apr-Sept 2027), in line with RBI estimate."
The following are the expectations of economists and market participants on future interest rate cuts:
| ORGANISATION | INTEREST RATE EXPECTATION |
| ANZ Bank India | No more rate cut |
| Nomura | Pause in February, 25 bps cut in April |
| YES Bank | No more rate cut |
| CareEdge Ratings | No more rate cut |
| Nirmal Bang Equities Pvt. Ltd. | Room for one more rate cut |
| MUFG Bank | No more rate cut |
| Barclays | No more rate cut |
| PGIM India Mutual Fund | No more rate cut |
| IDBI Bank | No more rate cut |
| Bank of Baroda | Rate cut in February |
| Axis Max Life Insurance | Rate cut in February |
| Kotak Mahindra Bank | Rate cut in February |
| State Bank of India | Pause for longer |
| HSBC | Risks of further rate cuts in FY27 |
| Capital Economics | Rate cut in February |
| Deutsche Bank | No more rate cut |
| Union Bank of India | Rate cut in February not ruled out |
| IDFC FIRST Bank | No rate cut in February |
| HDFC Bank | Rate cut in February possible |
| Piramal Finance | 25 bps rate cut in February or April |
| QuantEco Research | No more rate cut |
End
Edited by Vandana Hingorani
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