New Delhi, Nov 29 (NationPress) The upcoming monetary policy review meeting of the Reserve Bank of India (RBI) is scheduled for next week, coinciding with a period of historically low inflation and significant growth in the economy.

Recent data indicates that India's real GDP, adjusted for inflation, is projected to grow by 8.2 percent in the second quarter of FY 2025-26, compared to a growth rate of 5.6 percent in the same quarter of FY 2024-25.

Additionally, India's inflation trend in October shows a notable decline, emphasizing the economy's strong fundamentals and effective price control strategies. The headline inflation, as measured by the Consumer Price Index (CPI), has dropped to 0.25 percent year-on-year, representing the lowest figure recorded in the current CPI series.

Economists expressed on Saturday that the decision regarding the repo rate at the upcoming RBI Monetary Policy Committee (MPC) meeting will be closely contested.

“Since monetary policy is geared towards the future and inflation in Q4-FY26 and FY27 is expected to hover around 4 percent or more, resulting in a real repo rate of 1-1.5 percent, the current policy rate seems to be appropriately set. Under these circumstances, we believe there should be no adjustment to the policy rate,” stated Madan Sabnavis, Chief Economist at Bank of Baroda.

However, as liquidity is currently in surplus but on the lower end of the 1 percent of Net Demand and Time Liabilities (NDTL) threshold, there may be a rationale for implementing some Open Market Operations (OMOs).

“This would be beneficial in December when advance tax payments are expected to exit the system. Looking at forecasts, we anticipate a downward adjustment in the inflation estimate by 0.1-0.2 percent and an upward revision in GDP projections by 0.1-0.2 percent for FY26,” Sabnavis added.

Earlier this week, RBI Governor Sanjay Malhotra mentioned that there is potential for a repo rate cut to stimulate growth at the next monetary policy review meeting in December, given the favorable macroeconomic indicators. Malhotra had also pointed out after the previous monetary policy committee meeting in October that the drop in inflation allows the RBI to concentrate more on growth.

He noted that the central bank has two primary responsibilities: to ensure price stability and to promote growth. “We neither take an overly aggressive stance on growth nor remain overly defensive,” Malhotra commented.

The monetary policy committee, led by the RBI Governor, had kept the repo rate steady during the last two reviews in August and October to maintain inflation control. Prior to that, the RBI had reduced the repo rate by 100 basis points from 6.5 percent to 5.5 percent between February and June.

Morgan Stanley anticipates that the RBI will lower the repo rate by 25 basis points to 5.25 percent. The report suggests that the overall policy approach is expected to remain cautious, with the central bank likely to adopt a data-driven strategy following this adjustment.