Informist Poll
Most see MPC cutting rate by 25 bps Dec on tariff worries
This story was originally published at 21:35 IST on 1 October 2025
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By Pratiksha
MUMBAI – After leaving the door ajar on Wednesday, the Reserve Bank of India's Monetary Policy Committee may lower the repo rate in December to support growth amid risks from tariff-related uncertainties, according to an Informist poll.
Of the 19 economists and market participants polled after Wednesday's interest rate decision, nearly 58% said they see a 25-basis-point rate cut in December. Rest of the poll respondents expect the MPC to lower interest rates going ahead but did not specify a timeline for the same. Morgan Stanley expects the committee to slash rates by 25 bps each in December and February. The MPC will next meet on Dec. 3-5.
The MPC has lowered the repo rate by 100 bps between February and June to 5.50%. On Wednesday, it left the repo rate unchanged and retained the neutral policy stance for the second consecutive meeting.
RBI Governor Sanjay Malhotra said the impact of the front-loaded monetary policy actions and the recent fiscal measures is still playing out and the trade related uncertainties are still unfolding, adding that the MPC considered it prudent to wait for the impact of policy actions to play out and greater clarity to emerge before charting the next course of action. However, he said that "the current macroeconomic conditions and the outlook has opened up policy space for further supporting growth."
Most poll respondents said a benign inflation outlook may give the rate-setting panel comfort to go for a rate cut. The RBI lowered its inflation projection for 2025-26 (Apr-Mar) by 50 bps to 2.6% while also cutting its forecast for Oct-Dec by 130 basis points to 1.8%.
"Higher sowing, reservoir levels and buffer stocks should provide comfort on the food inflation front. Revised GST rates should also result in reduction in prices of several items in the CPI basket. Hence, core inflation should also remain contained despite higher gold and silver prices," ICICI Bank said in a note.
Further, some poll respondents said that there may be a case for one more rate cut after December, depending on how the US tariff situation evolves. "If trade related uncertainties in the form of higher US tariffs persist beyond 2025, the resulting downside risks to growth, could open up room for an additional 25 bps rate cut in 2026," Goldman Sachs said in a note.
The US has slapped an additional 25% punitive tariff on Indian goods, on top of a 25% reciprocal tariff, citing New Delhi's continued purchases of Russian crude oil. The two sides have re-started negotiations on a bilateral trade agreement and Commerce Minister Piyush Goyal last month said the first tranche of the deal could be signed by November.
The central bank raised its GDP growth projection for FY26 to 6.8% from 6.5% projected earlier, but slashed its projections for the remaining quarters of the current fiscal year as well as for Apr-Jun of FY27.
Most poll respondents pointed out that the fact that two external members of the MPC, Nagesh Kumar and Ram Singh, were of the view that the stance be changed to accommodative, is also somewhat indicative of scope for further easing.
The following are the expectations of economists and market participants on future interest rate cuts:
| ORGANISATION | NEXT RATE CUT EXPECTATION |
| Bank of Baroda | 25 bps cut |
| Barclays | 25 bps cut in December |
| CareEdge | 25 bps cut in December |
| Emkay Global Financial Services | 25 bps cut in December |
| HSBC | 25 bps cut in December |
| Goldman Sachs | 25 bps cut in December |
| ICICI Bank | 25 bps cut in December |
| IDBI Bank | 25 bps cut in December |
| India Ratings | One more cut |
| Invesco Mutual Fund | one more cut |
| Kotak Mahindra Bank | 25-50 bps cut |
| Morgan Stanley | 25 bps cut in December, February each |
| PGIM India Mutual Fund | Rate cut in December |
| Quantum AMC | 25 bps cut in December |
| SBI | Rate cuts possible but timing uncertain |
| SBI Capital Markets | 25 bps cut |
| SBM Bank India | 25 bps cut December |
| UTI AMC | 25-50 bps cut |
| YES Securities | 25 bps cut |
End
Edited by Akul Nishant Akhoury
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