New Delhi: A new report suggests that the Reserve Bank of India (RBI) may implement another rate cut in the upcoming months, as inflation expectations have significantly decreased. According to data from the Bank of Baroda (BoB), while the RBI has maintained the repo rate at 5.5 percent thus far, there remains potential for further easing to bolster growth. The report emphasizes that reductions in GST rates and increased festive season spending are likely to play crucial roles in driving India’s economic growth in the current quarter. These elements are anticipated to enhance consumption and help counteract global challenges.
The ‘Monthly Economic Buffet’ report for September 2025 indicates that the Monetary Policy Committee (MPC) has reached a unanimous decision to uphold a neutral policy stance, keeping rates stable while assessing the effects of tariff adjustments and GST rationalization on economic activity. Furthermore, the RBI has raised India’s growth forecast for FY26 to 6.8 percent from the previous 6.5 percent, reflecting stronger performance in the first half of the fiscal year. Conversely, inflation expectations have been adjusted downward to 2.6 percent for FY26 from 3.1 percent previously. The report highlights that high-frequency indicators such as air passenger traffic, port cargo movement, and rail freight have shown signs of moderation, signaling a slight slowdown in momentum.
However, improvements have been noted in diesel consumption, government expenditures, and bank credit growth. The recent GST rate reduction and festive season are expected to significantly boost demand in the upcoming months. The Bank of Baroda affirmed that India remains the fastest-growing major economy globally, primarily driven by robust domestic consumption.
