RBI MPC meeting: Even as India’s growth-inflation dynamics remain largely favourable and geopolitical uncertainties persist, the Reserve Bank of India (RBI) may announce a 25-basis-point rate cut on Friday, December 5. The central bank will likely take note of the weakness in manufacturing even though headline numbers are strong.
India’s growth surged to a six-quarter high of 8.2%, but the grew by just 0.4% year-on-year in October, its slowest pace of expansion in 14 months. On the other hand, plunged to a record low of 0.25% in October.
Can mixed macro signals nudge the RBI for a rate cut?
Experts believe the central bank will take note of the nominal GDP, which grew by 8.7% during the September quarter after falling to a three-quarter low of 8.8% in Q1 of FY26.
According to brokerage firm Emkay Global Financial Services, FY26 nominal GDP is likely to come in under 8%, requiring a recalibration of all macro and market variables, such as fiscal deficit, GDP, debt-to-GDP ratio, credit growth, and corporate earnings.
Emkay believes any nominal growth slippage would demand a much sharper fiscal consolidation to achieve the same debt-to-GDP improvement.
Emkay believes the RBI may cut the repo rate by 25 basis points with a split MPC vote.
“Clear near-term inflation visibility—and the need to shift away from an increasingly misplaced one-year-ahead CPI anchor—strengthens the case for a December cut, even with a possible split MPC,” said Emkay.
G. Chokkalingam, the founder and head of research at Equinomics Research Private Limited, believes the RBI can deliver a 25-bps rate cut on December 5 because the manufacturing sector is struggling.
However, some experts believe that the RBI will maintain a pause because the domestic economy does not need monetary stimulus at this juncture.
“While ultra-low inflation may justify a rate cut, there is no need for monetary stimulus when the economy is firing on all cylinders. And even if there is a rate cut, it is unlikely to impact the market this time,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
“You cannot cut rates when the rupee has already depreciated more than 5% and the RBI is not intervening—sending a message that there is nothing wrong with ₹90 per dollar, especially when inflation is very low,” Vijayakumar observed.
Can a rate cut cheer the market?
Experts do not expect a 25 bps to boost market sentiment due to retail liquidity constraints amid the flurry of IPOs.
“A 25 bps rate cut may not cheer the market because the market is more worried about tight liquidity. If the RBI signals more rate cuts are coming, then the market may see some fresh momentum,” said Chokkalingam.
However, it is unlikely that the central bank will give clear hints about further rate cuts at this juncture. Experts believe India is nearing the end of the rate cut cycle, and the repo rate may remain at 5.25% for an extended period.
“We are expecting one rate cut of 25 bps, which will take repo to 5.25%. Further, we think limited scope for easing monetary policy in FY26,” said Vijay Gour, a research analyst at Mirae Asset ShareKhan.
“We also believe India is close to the end of its monetary easing cycle. October likely marked the low point for inflation. Hence, we expect price pressures to rise from here due to adverse base effects. Inflation to increase from 1.5% to 4.0% by Q4FY26,” said Gour.
The domestic market awaits clarity on the India–US trade talks amid evolving geopolitical developments. is to arrive in New Delhi on December 4 for a state visit. According to experts, his visit is likely to strengthen trade partnerships between India and Russia across defence, aerospace, oil, and energy.
However, it remains to be seen how the growing bonhomie between New Delhi and Moscow will influence India–US trade negotiations, especially at a time when President Donald Trump has been pressuring India to stop its purchases of Russian oil.
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