Industry seeks rate cut as economists expect pause by RBI amid 8.2% Q2 GDP and low inflation

By Nikhil Dedha

Mumbai (Maharashtra) [India], December 1 : As the Reserve Bank of India's Monetary Policy Committee (MPC) prepares to announce its policy decision this week, the industry and economists remain divided on what the central bank will do.

While India's GDP growth came at 8.2 per cent in the second quarter, leading many economists to expect a pause, however industry players are hopeful of a 25 basis-point rate cut to support the ongoing economic momentum.

In an exclusive conversation with ANI, experts shared their views on the mixed signals facing the central bank.

Mehul Pandya, MD and Group CEO of CareEdge Ratings, toldthat both strong GDP growth and multi-year low inflation present opposing signals for interest-rate decisions.

He said "Both these developments (of a continued strong GDP growth and multi-year low inflationary levels) are mutually opposing forces from an interest rate perspective. Central banks usually do not tend to cut interest rates during the periods of strong economic activity, represented by GDP growth. At the same time, the central banks usually respond to low inflationary environment by cutting interest rates".

Pandya added that India's strong economic growth is a response to ongoing fiscal and structural reforms. However, he also pointed out that the RBI will consider global uncertainties and challenging trade conditions with key partners, which could influence India's growth outlook.

He said that low inflation gives the central bank some flexibility. "On the balance, the environment does appear conducive for a rate cut next week, though with a limited room for any further expectations for 2026," he noted.

While taking different stance, Mayur Modi, Co-founder and Co-CEO of Moneyboxx Finance Limited, said that India's record GDP growth gives the RBI more policy freedom.

He explained that strong domestic demand and better fiscal conditions reduce the risks linked to a shift towards a more accommodative policy. A well-timed rate cut, he said, could support consumption cycles and help boost credit demand across sectors.

He stated "With inflation easing to multi-year lows and remaining comfortably within the RBI's tolerance band, the probability of a repo rate cut has strengthened meaningfully. Softening price pressures give the MPC more room to prioritise growth without risking macroeconomic stability".

Another industry expert, Rohit Arora, CEO and Co-Founder of Biz2X and Biz2Credit, also believes the current situation strengthens the case for a 25-basis point cut.

He added that easing inflation and market expectations point towards an opportunity for the RBI to take a more supportive approach.

He said "With inflation continuing to ease and financial markets increasingly pricing in a 25-basis point reduction, the upcoming policy review presents a strong opportunity for the RBI to adopt a more supportive stance".

With opinions divided, the upcoming RBI policy announcement is widely expected to set the tone for interest rates in the coming months.

The MPC meeting is scheduled for 3rd December to 5th December, while the policy decision will be announced on 5th December with RBI Governor Sanjay Malhotra making the announcement at 10 AM.

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