RBI Repo Rate Announcement: Will MPC Hold or Cut Rates?

The Reserve Bank of India (RBI) is set to announce its monetary policy on Wednesday and keep track on the Monetary Policy Committee (MPC) will hold or cut the repo rate. This decision is highly anticipated as it directly impacts inflation, loan EMIs and overall economic growth. The MPC’s decision will mould the economic environment and this announcement affect the consumers and businesses.

Current Repo Rate and Expectations

As of the last monetary policy meeting in August 2025, the repo rate is 5.50%. The MPC is likely to keep rate maintain during the upcoming policy review. However, economists, including those from the State Bank of India (SBI), believe that a 25 basis points (bps) cut could support India’s economic growth and relieve borrowers.

RBI Governor Sanjay Malhotra heads the central bank and will be crucial in guiding the MPC's decision. Malhotra has been focused on managing inflation while encouraging growth for the global challenges. His leadership will be vital in deciding whether to ease rates or hold.

Know More: RBI Monetary Policy 2025: RBI Repo Rate Remains at 5.5%.

What is the Repo Rate and Why Does It Matter?

Before expecting into the possible outcomes, it is important to understand the repo rate. The repo rate is the rate at which the RBI lends money to commercial banks. When the RBI adjusts this rate, it directly affecting the cost of borrowing for banks & the cost of loans for consumers and businesses.

If the RBI cuts the repo rate, loans become cheaper, encouraging spending and investment. In contrast, increasing the repo rate makes borrowing more expensive and can help control inflation.

For More Updates: RBI Repo Rate Cut 2025: Impact on Loans, Deposits & Markets 

Will the RBI Hold or Cut Rates?

The upcoming RBI decision is likely based on the current economic situation. The RBI aims to balance inflation control with economic growth support. Here are the key factors that affect the decision of repo rate:

Factors Influencing the Repo Rate Decision:

• Inflation Trends: Inflation has been a primary issue in India, causing the RBI to raise the repo rate in previous meetings. However, recent data show inflation is cooling, potentially giving the RBI more space to reduce rates.
• Economic Growth: India's economy is recovering from recent challenges and the RBI may consider lowering rates to support growth. Lower rates can support businesses to invest and consumers to spend.
• Global Factors: Global economic conditions, such as U.S. Federal Reserve rate hikes & international commodity price fluctuations, can influence India’s repo rate decision.
• Monetary Policy Goals: The RBI’s primary goal is to balance controlling inflation and promoting economic growth. If inflation is under control, the RBI may cut the repo rate to encourage economic recovery.

How Could This Impact You?

If the RBI cuts the repo rate, it could lead to lower interest rates on home, car and personal loans. This would benefit borrowers by reducing their monthly repayments. However, if the RBI decides to hold the rate, there will be no immediate impact to loan EMIs, but inflation could remain under control.

In summary, the RBI’s decision on the repo rate will be define the financial environment for the upcoming months. While there is guesswork that the RBI may cut rates but only time will tell reveal that the central bank will hold or take action to support economic recovery.

Keep an eye for the official announcement on Wednesday!