RBI Weighs Options Amid Geopolitical Tensions: Rate Cut Likely?

The Reserve Bank of India (RBI) is contemplating maintaining the current interest rate during its Monetary Policy Committee meeting, although some analysts predict a possible 25 basis point cut. Geopolitical tensions and US tariffs are influencing this crucial decision, with implications for India's economy and inflation outlook.

The Reserve Bank of India's (RBI) Monetary Policy Committee is underway, with widespread speculation on whether the central bank will keep the key interest rate unchanged. Experts are divided, with some anticipating a 25 basis point cut as a response to ongoing geopolitical tensions and the recent US tariffs on Indian exports.

In recent months, the RBI has implemented a 100 basis points reduction in three separate tranches. The central bank maintained the status quo in its August meeting, adopting a cautious 'wait-and-watch' strategy to evaluate the US tariffs' impact and other geopolitical factors on India's economy.

While a Goldman Sachs report anticipates maintaining the repo rate at 5.50% with a neutral stance this October, it suggests a 25 basis point cut by December, contingent on inflation outlooks and international economic conditions. Stakeholders from various sectors, including housing and finance, express optimism about potential rate cuts stimulating market demand and supporting economic growth.

(With inputs from agencies.)