In the meeting of the Monetary Policy Committee to be held by the Reserve Bank of India (RBI) in October, it would be appropriate and rational to reduce the repo rate by 0.25 per cent, as retail inflation is expected to be low in the upcoming financial year 2026-27. This has been said in a research study released by State Bank of India (SBI) on Monday. Amid a decline in Consumer Price Index (CPI) based inflation, the Reserve Bank of India has cut the repo rate by 1.00 per cent from February this year. After the repo rate cut for three consecutive times, RBI decided to keep it unchanged in August.
The decisions taken in the MPC meeting will be announced on 1 October.
The Monetary Policy Committee (MPC) headed by the Governor of the Reserve Bank of India Sanjay Malhotra will hold a meeting for three days from September 29. The decisions taken in the meeting will be announced on 1 October. A research report by the Economic Research Department of State Bank of India, “Preface of the MPC meeting” stated, “Interest rates are appropriate and logical in September, but RBI will have to consider it carefully, as interest rates are more likely to be cut after June.”
CPI can be close to 1.1 percent in October
The report said that the CPI figure for FY 2026-27 is currently around 4 percent or less. With a decrease in GST rates, the CPI may be close to 1.1 percent in October, the lowest since 2004. SBI Research said, “Interest rate cuts are the best option for RBI in September, with RBI emerging as a visionary central bank.”
Inflation may fall from 0.65 to 0.75 percent
A report written by SBI Group Chief Economic Advisor Soumya Kanti Ghosh estimated that GST reforms may reduce the Consumer Price Index (CPI) inflation by 0.65 to 0.75 percent. The government has directed the RBI to maintain the Consumer Price Index (CPI) at 4 percent, with a difference of 2 percent on both sides.