Monetary policy balanced, says India Inc as it hopes for rate cut in December

New Delhi: India Inc on Wednesday termed Reserve Bank's decision to keep interest rate unchanged 'balanced', and expressed hope that the central bank will reduce the benchmark lending rate in December monetary policy.

RBI's six-member monetary policy committee (MPC) voted unanimously to keep the repurchase rate unchanged at 5.5 per cent and decided to continue with a "neutral" policy stance, giving it flexibility to move in either direction if needed in future.

The rate-setting panel, headed by RBI Governor Sanjay Malhotra and including three external experts, had cut interest rate by a total of 100 basis points this year before hitting a pause at its previous bimonthly meeting in August.

Commenting on the monetary policy, Harsha Vardhan Agarwal, President of FICCI said the industry chamber is encouraged by RBI’s upward revision of India’s growth outlook from 6.5 per cent to 6.8 per cent for 2025-26, reflecting the underlying resilience of the economy and the positive impact of recent policy initiatives, particularly the rationalisation of GST.

"As we look forward to accelerating the growth momentum, we remain confident that the RBI will continue to support growth with timely measures, including a potential cut in repo rate in the next policy statement," Agarwal said.

Madan Sabnavis, Chief Economist of Bank of Baroda too opined that a rate cut could be expected provided the data supports it in the course of the year.

"Given that inflation will be 4.5 per cent in Q1 of next year a repo rate of 5.5 per cent will mean a real rate of just 1 per cent. This will be critical when a call is taken given that the low base effect of inflation this year will tend to prop up inflation in 2026-27," he said.

Industry chamber Assocham said RBI's monetary policy decision is a balanced approach to support growth while keeping an eye on inflation.

"After the earlier 100 bps rate cut this year, the RBI’s steady and cautious outlook gives confidence to businesses, investors, and the broader economy," said Sanjay Nayar, President of Assocham.

Mandar Pitale, Head of Financial Markets at SBM Bank (India) said the closing remark in the MPC statement gives a clear indication that any lead indicator pointing towards hampering growth, will take center stage while charting the next course of action in December MPC meeting.

The probability of a 25 basis points residual cut in December MPC has increased, Pitale added.

Madhavi Arora, Chief Economist, Emkay Global Financial Services said the MPC’s decision to hold rates largely hinges on them waiting for clouds to clear around external and domestic uncertainties, including the impact of tariff hikes, GST cuts, and transmission of past easing.

Commenting on the monetary policy, Raoul Kapoor, Co CEO, Andromeda Sales and Distribution said the RBI’s decision comes in line with market expectations.

"As we move into the festive season, we expect to see a significant boost in borrowing across categories—ranging from consumer loans to housing finance—driven by improved affordability, policy support, and stronger consumer sentiment," Kapoor said.

Pyush Lohia, Director of Lohia Worldspace said RBI holding the repo rate at 5.5 per cent reinforces market stability and signals a measured approach to balancing growth and inflation.

"This clarity benefits both developers and homebuyers, providing a predictable environment for decision-making," Lohia said.

Shikhar Aggarwal, Chairman, BLS E-Services said as anticipated, the RBI has maintained its 'neutral' monetary policy stance and kept the repo rate unchanged at 5.50 per cent.

"This consistency is a positive enabler for the festive season, which typically sees a surge in consumer spending," Aggarwal said.

He further said the RBI's policy statement underscores that achieving the 'Viksit Bharat' goal by India's centenary year of independence will require coordinated support from fiscal, monetary, and regulatory policies. Today's announcement is precisely aligned with that vision.

Ashish Lath, Founder and CEO, SaveSage said with the RBI keeping the repo rate unchanged, borrowing rates are likely to remain stable in the near term.

"However, with inflation easing, the trend points towards a potential rate cut in upcoming MPC meetings. This means banks and lenders will gradually start preparing for lower rates, which could create downward pressure on borrowing costs in the months ahead," Lath said.

Rohit Arora, CEO and Co-Founder, Biz2X and Biz2Credit said that with CPI expected as low as 1.8 per cent in Q2, the outlook provides space for credit expansion without price pressures.

"For MSMEs and fintech-driven lenders, this stability ensures predictable borrowing costs and steady liquidity flow at a time when festive demand and working capital needs are rising. The neutral stance and clear guidance will help banks, NBFCs and fintechs strengthen credit delivery," he said.

Srinivasan Vaidyanathan, Operating Partner, Essar Capital said amidst a major demand push by reduction in the GST rates, the RBI has adopted a cautious approach of holding the repo rate at 5.5 per cent.

It will also help navigate the global uncertainties and choppy waters. With low inflation and steady policies, corporates can plan their finances carefully and invest wisely, Vaidyanathan said.