A rate cut at this stage is expected to provide relief to borrowers across sectors, from retail homebuyers to MSMEs that continue to face high borrowing costs.
Bengaruru : India’s monetary policy outlook has taken a decisive turn ahead of the Reserve Bank of India’s (RBI) upcoming policy meeting scheduled between December 3 and 5, with a fresh Reuters poll indicating that the central bank is likely to cut the benchmark interest rate by 25 basis points, bringing it down to 5.25 percent. This expected reduction marks the first rate cut in several quarters and comes amid signs of moderating inflation, easing global commodity prices, and a visible slowdown in domestic consumption trends that policymakers have been closely monitoring.
According to the survey of economists, the RBI’s Monetary Policy Committee appears increasingly comfortable with the current inflation trajectory, which has remained within the central bank’s tolerance band for several months. While headline inflation is yet to settle into the ideal 4 percent zone, the broader trend suggests stability, giving the central bank room to shift focus toward supporting growth. The global economic environment—marked by softer demand in advanced economies and cautious monetary easing by major central banks—has also contributed to expectations that India may move toward a more accommodative stance.
A rate cut at this stage is expected to provide relief to borrowers across sectors, from retail homebuyers to MSMEs that continue to face high borrowing costs. Industry leaders have been vocal about the need for lower rates to stimulate investment, especially as private capital expenditure has stagnated and rural demand remains patchy. A reduction in the repo rate could help inject momentum into the real estate, automobile, and consumer durables sectors, where sentiment has been improving but remains vulnerable to elevated financing costs.
At the same time, the central bank is likely to maintain a cautious tone, emphasising that future actions will depend on evolving inflation conditions, weather patterns, geopolitical disruptions, and global financial trends. The RBI has made it clear in recent policy statements that anchoring inflation expectations remains its top priority, even as it seeks to avoid choking growth at a delicate juncture.
If the RBI does go ahead with the predicted rate cut, it will mark a shift from its prolonged pause phase and signal confidence that the economy is strong enough to handle a gradual easing cycle. Economists believe that a well-timed cut could help bolster consumer sentiment, support credit growth, and provide a buffer against global headwinds. For markets, banks, and policymakers alike, the December policy announcement is now being viewed as one of the most consequential decisions of the year.
Bengaruru : India’s monetary policy outlook has taken a decisive turn ahead of the Reserve Bank of India’s (RBI) upcoming policy meeting scheduled between December 3 and 5, with a fresh Reuters poll indicating that the central bank is likely to cut the benchmark interest rate by 25 basis points, bringing it down to 5.25 percent. This expected reduction marks the first rate cut in several quarters and comes amid signs of moderating inflation, easing global commodity prices, and a visible slowdown in domestic consumption trends that policymakers have been closely monitoring.
According to the survey of economists, the RBI’s Monetary Policy Committee appears increasingly comfortable with the current inflation trajectory, which has remained within the central bank’s tolerance band for several months. While headline inflation is yet to settle into the ideal 4 percent zone, the broader trend suggests stability, giving the central bank room to shift focus toward supporting growth. The global economic environment—marked by softer demand in advanced economies and cautious monetary easing by major central banks—has also contributed to expectations that India may move toward a more accommodative stance.
A rate cut at this stage is expected to provide relief to borrowers across sectors, from retail homebuyers to MSMEs that continue to face high borrowing costs. Industry leaders have been vocal about the need for lower rates to stimulate investment, especially as private capital expenditure has stagnated and rural demand remains patchy. A reduction in the repo rate could help inject momentum into the real estate, automobile, and consumer durables sectors, where sentiment has been improving but remains vulnerable to elevated financing costs.
At the same time, the central bank is likely to maintain a cautious tone, emphasising that future actions will depend on evolving inflation conditions, weather patterns, geopolitical disruptions, and global financial trends. The RBI has made it clear in recent policy statements that anchoring inflation expectations remains its top priority, even as it seeks to avoid choking growth at a delicate juncture.
If the RBI does go ahead with the predicted rate cut, it will mark a shift from its prolonged pause phase and signal confidence that the economy is strong enough to handle a gradual easing cycle. Economists believe that a well-timed cut could help bolster consumer sentiment, support credit growth, and provide a buffer against global headwinds. For markets, banks, and policymakers alike, the December policy announcement is now being viewed as one of the most consequential decisions of the year.
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