Summary of this article
Decade-low inflation strengthens expectations of RBI rate cuts.
Experts highlight growth stability supporting calibrated monetary easing.
Global risks may shape RBI decisions after December.
India has commenced the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) meeting today, on December 3, 2025, on a considerably strong macroeconomic footing. Headline inflation softened to a multi-decade low of 0.25 per cent in October 2025; food inflation is still in deflationary territory. GDP growth is seen at 6.8 per cent, and core, as well as overall, inflation remains soft.
Analysts widely expect a 25-basis-point cut to the repo rate, bringing it to 5.25 per cent, though RBI is likely to remain cautious and data-driven, balancing growth support with price stability. A recent Reuters poll also showed that 62 out ot 80 economists expect the rate cut.
The central bank has held rates since August 2025 after cumulative cuts of 100 basis points earlier in the year. RBI Governor Sanjay Malhotra indicated that there is still some room for further easing, but the RBI will be vigilant on balancing growth support with financial stability.
Growth And Inflation Trends Support Easing
India’s low inflation and stable growth provide a rare macro sweet spot. Amit Suri, mutual fund distributor and founder of AUM Wealth, said India enters the meeting with two positives: “Growth is holding up well, and inflation has stayed below the 4 per cent target for many months.” He added that with the repo rate at 5.5 per cent, there is room for one last 25-basis-point cut. “Even if this happens, RBI will stay cautious and data-driven, focusing on maintaining stability while helping growth gradually,” he noted.
Saurabh Bansal, a Sebi RIA and the founder of Finatwork Investment Advisor, highlighted that RBI’s dovish tone in October, along with continued softening of food prices, supports further rate reduction. “If Q2 growth figures indicate ongoing economic weakness or if rural incomes and demand continue to falter, this will likely support a rate cut,” he said. He added that "weakening exports, global trade tensions, and coordination between fiscal and monetary policies will influence RBI’s December decision."
Policy Easing With Caution
Shubham Gupta, CFA and co-founder of Growthvine Capital, said headline inflation’s multi-decade lows, aided by food disinflation and GST-led softening, have lifted real interest rates, creating space for easing. “A first cut of 25 basis points is on the cards at the upcoming meeting, with scope for a further 25 bps reduction in early 2026, possibly February, assuming inflation stays benign and global conditions remain stable,” he said. He emphasised that "RBI will remain vigilant against sticky core inflation pockets and external risks."
Sadhika Agarwal, leading investments at Equirus InnovateX Fund, highlighted the rare combination of low inflation and strong growth. “Even a calibrated 25-basis-point cut would signal policy confidence and help cushion domestic demand against global headwinds. Even if the Committee opts for a hold, the broader message is clear: India is heading into a phase of sustained macro stability that gives investors visibility and guidance,” she said. She added, "Predictable rates improve liquidity, strengthen risk appetite, and accelerate capital formation, which is critical for early-stage investment going into 2026."
Structural Reforms Reinforce Rate Cut Case
Vivek Iyer, partner and financial services risk advisory leader, Grant Thornton Bharat, pointed to reforms enhancing the business environment. “Regulatory forbearance on export reforms, new products like merchant acquisition financing, GST simplification, and harmonisation of compliance circulars reduce the cost of doing business. With focus on ease of doing business, lowering borrowing costs is where we expect the rate cut to come in,” he said.
Amit Bansal, founder of BharatLoan said the meeting is important for the credit ecosystem. “With inflation easing sharply and early signs of demand moderation, this MPC meeting comes at an important juncture for India’s credit ecosystem. Whether RBI opts for a small cut or maintains its stance, the present environment of stable growth and predictable inflation is already creating a healthier backdrop for responsible credit access among working Indians,” he noted.
External headwinds such as US import tariffs, global commodity volatility, and shifts in external demand may influence RBI decisions beyond December.
