New Delhi, Dec 3 (IANS) The much-anticipated Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting is set to begin from Wednesday, with the outcome on the key policy rate on Friday.

The three-day MPC meeting comes at a time when inflation is at an all-time low and GDP growth on a high trajectory path. The real GDP, adjusted for inflation, grew at 8.2 per cent in Q2 of FY 2025-26, against the growth rate of 5.6 per cent during Q2 of FY 2024-25.

Notably, inflation trajectory in October reflected a remarkable softening, underscoring the economy’s robust fundamentals and effective price management measures.

Economists and market experts say that it would be a close call on the repo rate at the RBI MPC.

Madan Sabnavis, Chief Economist, Bank of Baroda, has said that given that monetary policy is forward looking and inflation in Q4-FY26 and FY27 is likely to be in the 4 per cent plus region, “yielding a real repo rate of 1-1.5 per cent, the policy rate appears to be at a fair level. Under these conditions we do not think that there should be any change in the policy rate”.

According to an SBI report, expectations built till a few days back of a shallow rate cut of 25 basis points (bps) by the RBI appear to have faded as finer readings of the strong Q2 growth print and the evolving playbook make the choice tilted in favour of a pause in December policy. It is of the view that the RBI may have to ensure “calibrated easing” within “neutral stance” through liquidity measures to ensure a sobering impact on yields.

However, since inflation is set to remain well below target for the foreseeable future, HSBC Global Investment Research projects that the RBI will cut rates by 25 bp during its MPC decision on December 5 — taking the policy repo rate to 5.25 per cent.

—IANS

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