**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 for the upcoming Reserve Bank of India (RBI) monetary policy meeting. This suggestion comes amid expectations of benign inflation. However, most economists anticipate that the Monetary Policy Committee (MPC) will likely maintain the status quo when it announces its decision on October 1.
**Rate Reduction Considered the Best Option**
The SBI report described a 25bps rate cut as the “best possible option” for the RBI. This recommendation follows the central bank’s earlier actions, where it slashed the key short-term lending rate (repo) by 100bps in three installments since February, prompted by a decline in consumer price index (CPI)-based inflation.
Despite this, some experts believe the MPC may choose to maintain the current stance during its upcoming policy review meeting.
**Upcoming MPC Meeting**
The MPC, headed by RBI Governor Sanjay Malhotra, will convene for a three-day meeting from October 1 to 3 to discuss the policy rate. The meeting takes place amid ongoing geopolitical tensions and the US imposing 50% tariffs on Indian shipments.
In its August bi-monthly monetary policy review, the central bank opted to keep rates on hold while assessing how these external factors might impact India’s economy.
**Expectations and Analyst Views**
Aditi Nayar, Chief Economist at ICRA, noted that GST rationalization could lower headline CPI inflation by 25-50bps during Q3 FY2026 and Q2 FY2027. She also expects October-November 2025 to bring a new low in CPI inflation, though anticipates an upward trend thereafter.
Dharmakirti Joshi of Crisil Limited expects a repo rate cut as early as October, driven by lower-than-expected inflation and robust demand.
As the MPC meeting approaches, market watchers will keenly observe how these factors influence the RBI’s policy stance.
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