Mumbai: The latest SBI Research Report suggests that the Reserve Bank of India (RBI) should implement a 25 basis point (bps) rate cut in the upcoming Monetary Policy Committee (MPC) meeting scheduled for September 29 to October 1, 2025.
The report emphasizes that refraining from a rate cut while maintaining a neutral stance would constitute a “Type 2 error,” particularly as inflation continues on a benign trajectory.
According to SBI Research Report, consumer price index (CPI) inflation is currently tracking below 2% for September and October, with projections showing a further decline. With GST rationalization factored in, October CPI could touch 1.1%, marking the lowest level since 2004.
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The analysis underscores that a rate cut at this juncture would not only mitigate policy confusion but also project RBI as a forward-looking central bank.
The report notes that post-June 2025 rate cuts, GST rationalization has already created multiplier effects, while global developments have contributed to yield hardening across economies, including India.
SBI Research Report: Delaying Easing Measures Could Amplify Costs of Policy Missteps
Furthermore, SBI Research Report warns that delaying easing measures could amplify the costs of policy missteps. With inflation poised to remain at the lower end of the RBI’s target band of 4% ±2% through FY26 and FY27, the report advocates for a proactive stance.
Globally, central banks have been grappling with yield volatility and diverging monetary signals, making transparent communication a key policy tool. In India, benchmark yields have hardened since the June policy decision, with state development loans (SDLs) witnessing increased spreads.
Against this backdrop, the report reiterates that timely action through a rate cut in September would provide clarity and stability to financial markets.
