The Reserve Bank of India’s Monetary Policy Committee continued its three-day deliberation on Wednesday, with sources indicating that inflation trajectory and growth outlook remain the central topics of discussion.
MPC Deliberations
Key points under discussion as per market sources:
- Recent inflation data showing sustained moderation
- GDP growth slowdown and support measures
- Global monetary policy trends
- Financial stability considerations
- Credit growth trajectory
Inflation Analysis
The MPC is reviewing inflation data carefully. CPI inflation has remained within the target band for three consecutive months, with core inflation showing sustained improvement.
Growth Concerns
Q2 FY26 GDP growth of 5.4% has prompted discussions on whether monetary policy can provide additional support without compromising inflation targets.
External Sector Review
The committee is also reviewing external sector dynamics, including the rupee’s recent strengthening and the impact of global rate cut expectations.
Policy Options
Market participants anticipate three scenarios: a 25 bps cut (most likely), status quo (less likely), or a 50 bps cut (unlikely but discussed).
Banking Sector Input
Banks have submitted representations highlighting the need for lower borrowing costs to support credit offtake and economic recovery.
Decision Timeline
The MPC decision will be announced on Thursday at 10:00 AM, followed by the Governor’s press conference at 11:00 AM.
