**RBI Should Opt for 25bps Repo Rate Cut, Says SBI**
*By Dwaipayan Roy | Sep 28, 2025, 04:49 PM*
A recent report by the State Bank of India (SBI) has recommended a 25 basis points (bps) cut in the repo rate ahead of the upcoming Reserve Bank of India (RBI) monetary policy meeting. This suggestion comes amid expectations of benign inflation in the near term.
However, despite SBI’s recommendation, most economists anticipate that the Monetary Policy Committee (MPC) will maintain the status quo when it announces its decision on October 1.
### Rate Reduction: The ‘Best Possible Option’
The SBI report describes a 25bps rate cut as the “best possible option” for the RBI at this stage. Earlier this year, the central bank had already slashed the key short-term lending rate (repo) by 100bps in three installments since February, responding to a decline in consumer price index (CPI)-based inflation.
Nevertheless, some experts believe the MPC may opt to hold the current rates steady during the upcoming policy review, weighing various economic factors.
### Upcoming MPC Meeting
The MPC, headed by RBI Governor Sanjay Malhotra, will convene from October 1 to 3 to discuss the policy rate. This meeting takes place against a backdrop of ongoing geopolitical tensions and recent US-imposed 50% tariffs on Indian shipments.
In its August bi-monthly monetary policy review, the central bank chose to keep rates unchanged, carefully assessing how these external factors might impact India’s economy.
### Expectations and Economic Outlook
Aditi Nayar, Chief Economist at ICRA, noted that GST rationalization could reduce headline CPI inflation by 25-50 basis points during Q3 FY2026 and Q2 FY2027. She also expects that October-November 2025 could mark a new low for CPI inflation, although an upward trend may resume afterward.
Meanwhile, Dharmakirti Joshi of Crisil Limited expects a repo rate cut as early as October, citing lower-than-expected inflation numbers and sustained strong demand.
As the MPC meeting approaches, all eyes will be on the RBI’s decision and its implications for India’s monetary policy trajectory.
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