RBI to commence 3-day MPC meet from today:SBI pegs at 25 bps cut; currently repo rate stands at 5.50 per cent

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) meeting is starting on Monday, September 29, 2025. This meeting will continue until October 01, and all decisions made will be announced on the same day. In this MPC meeting, the RBI is expected to cut interest rates by 25 basis points. This information was recently provided in a latest report by the State Bank of India (SBI). If this happens, loan and interest rates may decrease slightly, which could provide relief to the general public and businesses. This could be a good sign for the economy because it will make loans cheaper and boost business. The report states that inflation is currently under control and is expected to decrease further. RBI not cutting rates would be a “Type 2 Error” The SBI report also stated that the reduction in GST rates in 2019 reduced inflation by about 35 basis points. Therefore, now is the right time to cut interest rates. If the RBI does not cut rates now, it will be a “Type 2 error,” meaning making the wrong decision at the right time. This has happened before when the RBI did not cut interest rates despite favorable conditions. India’s GDP growth projections as per RBI The scale of interest rate cuts has been high since June The report also emphasised that the scale of interest rate cuts has been high since June. Therefore, the RBI needs to present its case clearly and precisely. The central bank’s communication policy is a major weapon in itself. Inflation may remain below 2% in September-October According to the SBI report, inflation is expected to remain below 2% in September and October, and is likely to remain at 4% or less by the end of fiscal year 2027. If there are changes in GST rates, inflation may fall to 1.1% in October, which would be the lowest since 2004. RBI revised downward inflation projections for FY26 The previous MPC meeting was held from August 4 to 6 The previous MPC meeting of the RBI was held from August 4 to 6. In this meeting, the RBI did not change the repo rate. It was kept unchanged at 5.5%. Prior to this, the RBI had reduced the interest rate by 0.50% to 5.5% in June. RBI Governor Sanjay Malhotra had said that all members of the committee were in favor of keeping interest rates stable. This decision was taken due to tariff uncertainty. The rate at which the RBI lends to banks is called the repo rate. Not changing it means that interest rates will neither increase nor decrease. Repo Rate Cut 3 Times This Year, Reduced by 1% In its February meeting, the RBI reduced the interest rate from 6.5% to 6.25%. This cut by the Monetary Policy Committee came after nearly 5 years. In the second meeting held in April, the interest rate was reduced by another 0.25%. In June, for the third time, the rates were cut by 0.50%. That means the Monetary Policy Committee reduced interest rates by a total of 1% across three cuts. Why Does the Reserve Bank Increase or Decrease the Repo Rate? Every central bank has a powerful tool in the form of the policy rate to fight inflation. When inflation is very high, the central bank increases the policy rate to reduce money flow in the economy. If the policy rate is high, loans from the central bank become expensive for commercial banks. In turn, banks make loans expensive for their customers. This reduces money flow in the economy. With reduced money flow, demand decreases and inflation comes down. Similarly, when the economy is going through a slowdown, there is a need to increase money flow for recovery. In such cases, the central bank reduces the policy rate. This makes loans from the central bank cheaper for commercial banks, who then pass on cheaper loans to their customers. RBI Holds a Meeting Every Two Months The Monetary Policy Committee has 6 members. Out of these, 3 are from the RBI and the other 3 are appointed by the central government. The RBI holds its meetings every two months. Recently, the Reserve Bank released the schedule for the Monetary Policy Committee meetings for the financial year 2025–26. There will be a total of 6 meetings this financial year. The first meeting was held from April 7–9. MPC meet schedule in FY26 ​