Will RBI Cut Rates in December? Insights from Goldman Sachs Analyst
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Synopsis
As anticipation builds for the Reserve Bank of India's upcoming monetary policy meeting, Goldman Sachs' Chief India Economist Santanu Sengupta predicts a dovish stance with a potential rate cut in December. This article delves into the factors influencing this outlook, including GST reforms and external economic pressures. Stay updated on the latest economic insights!
Key Takeaways
- RBI likely to maintain current rates
- Potential rate cut in December
- GST reforms expected to boost consumption
- External pressures from US tariffs
- Projected economic growth of 6.5 percent
New Delhi, Sep 30 (NationPress) The Chief India Economist at Goldman Sachs, Santanu Sengupta, shared insights on Tuesday indicating that the Reserve Bank of India is likely to uphold existing interest rates while adopting a more dovish stance in the upcoming monetary policy committee meeting. Potential rate reductions could occur as early as December, contingent on prevailing economic conditions.
Investors are keenly anticipating the Reserve Bank of India's monetary policy decision on Wednesday, with hopes for a forthcoming cut in lending rates.
Sengupta highlighted that the RBI's decisions will be influenced by the unpredictable trade policies and external challenges, even though the domestic growth outlook remains robust.
He projects a possible 25-basis-point rate cut in December, assuming that growth and inflation metrics substantiate this move, as reported by various sources.
He mentioned that a rate cut is plausible in December, due to stable domestic growth, despite external pressures such as US tariffs and H-1B visa limitations that are dampening sentiment.
Sengupta noted that GST reductions are expected to spark a "mass consumption revival" beginning in the October–December quarter when the effects of consumption growth will become evident.
For Foreign Institutional Investors (FIIs) evaluating India, the challenges posed by tariffs and H-1B visa restrictions are significant, leading to outflows, which Sengupta identifies as the primary obstacle facing India.
Despite the concerns surrounding US visa restrictions, Sengupta characterized the impact of the H-1B visa rules as "muted in the near term."
He affirmed that the domestic economy's state appears favorable, with GST reforms contributing positively to growth.
Regarding additional economic measures from the government beyond the GST rate cuts, Sengupta expressed skepticism, citing the need to adhere to a fiscal deficit target of 4.4 percent.
Earlier reports indicated that India's economy is projected to accelerate to 6.5 percent growth in FY2026 GDP, an increase from an earlier estimate of 6 percent, largely credited to GST reforms.
Point of View
It's essential to recognize the balanced perspective provided by experts like Santanu Sengupta of Goldman Sachs. His insights reflect a comprehensive understanding of both domestic growth and external pressures, aligning with our commitment to delivering trustworthy and authoritative news.
NationPress
30/09/2025
Frequently Asked Questions
What is the expected rate cut from RBI?
Goldman Sachs predicts a potential 25-basis-point rate cut in December, depending on economic conditions.
How will GST reforms impact the economy?
GST reforms are anticipated to drive a mass consumption revival, contributing positively to economic growth.
What external challenges is India facing?
India is currently facing challenges from US tariffs and H-1B visa restrictions, impacting investor sentiment.
What is the RBI's current stance on interest rates?
The RBI is expected to maintain current rates and adopt a dovish approach in its upcoming policy meeting.
What growth rate is projected for India's economy?
India's economy is projected to grow at 6.5 percent in FY2026, up from the previous estimate of 6 percent.
