**RBI Should Opt for 25bps Repo Rate Cut, Says SBI**
*By Dwaipayan Roy | Sep 28, 2025, 04:49 PM*
A recent report by the State Bank of India (SBI) has recommended a 25 basis points (bps) cut in the repo rate ahead of the upcoming Reserve Bank of India (RBI) monetary policy meeting. This suggestion comes amid expectations of benign inflation. However, most economists anticipate that the Monetary Policy Committee (MPC) may maintain the status quo when it announces its decision on October 1.
**Rate Reduction: The Best Possible Option**
The SBI report described a 25bps rate cut as the “best possible option” for the RBI at this juncture. This recommendation follows three repo rate cuts totaling 100bps since February, implemented in response to a decline in consumer price index (CPI)-based inflation.
Despite this, some experts believe the MPC might choose to hold the current rates steady in its forthcoming policy review meeting.
**MPC Meeting Agenda**
The MPC, chaired by RBI Governor Sanjay Malhotra, is scheduled to meet from October 1 to 3 to discuss the policy rate. This meeting occurs against a backdrop of geopolitical tensions and the United States imposing 50% tariffs on Indian shipments.
In its August bi-monthly monetary policy review, the RBI had opted to maintain the status quo while evaluating these external factors’ potential impact on India’s economy.
**Policy Effects and Expectations**
Aditi Nayar, Chief Economist at ICRA, noted that GST rationalization could reduce headline CPI inflation by 25-50bps during the third quarter of FY2026 and the second quarter of FY2027. She also projects that October-November 2025 could mark a new low for CPI inflation, albeit with an anticipated upward trend thereafter.
Dharmakirti Joshi of Crisil Limited expects a repo rate cut as soon as October, citing lower-than-expected inflation and robust demand conditions.
As the MPC meeting approaches, market participants and analysts will closely monitor the RBI’s stance on repo rate adjustments amid evolving economic and geopolitical dynamics.
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