After GST & Income Tax Relief, Will RBI MPC Offer Another Respite To Common Man Next Week?

The government and the Reserve Bank of India (RBI) have given much-needed respite to the common man this year, including an income tax rebate on annual earnings up to Rs 12 lakh, GST cuts across daily-use items, and multiple repo rate cuts leading to lower EMIs. Now, the RBI MPC, the rate-setting panel of the central bank, will conduct another monetary policy review next week between September 29 and October 1. Will it cut the key repo rate by another 25 basis points (bps)?

The RBI has already reduced the repo rate three times in the current rate cut cycle — 25 bps each in February and April, and 50 bps in June by RBI. However, in the previous policy, August 2025, the key policy rate was kept unchanged at 5.5%, with the ‘neutral’ stance.

RBI MPC

September-October 2025: What Analysts Expect?

According to a report by State Bank of India (SBI), the RBI MPC may announce a 25 bps cut in its September 2025 policy meeting as it is the “best possible option” at this stage.

“Central Banks’ communication sans cacophony, is a policy tool unto itself amidst all the chaos. No point in committing a Type 2 error (No rate cut with Neutral Stance) in September also. A 25 bps rate cut in September is the best possible option for RBI,” It stated.

The SBI report highlighted that post-June, the bar for rate cuts has become higher, and any such decision will require calibrated communication by the central bank.

However, it emphasized that inflation is expected to remain benign even in FY27. Without any Goods and Services Tax (GST) cut, inflation is already tracking below 2 per cent in September and October.

CPI numbers for FY27 are now estimated to track around 4 per cent or less. With GST rationalisation, October CPI could fall closer to 1.1 per cent, which would be the lowest since 2004.

The MPC is scheduled to meet on September 29 and 30, with the policy announcement slated for October 1, 2025.

Brokerage firm Elara Capital also see a rate cut in October. In its note, the brokerage firm said, “With benign inflation outlook, we see the possibility of another 25bps rate cut in October-December 2025E.”

However, several economists expect another status quo in October.

Aditi Nayar, chief economist of ICRA Ltd, said the CPI inflation rebounded to 2.1% in August 2025 from 1.6% in July 2025, printing in line with expectations. While the average CPI inflation for FY2026 is now likely to print around 2.6%, and October-November 2025 may mark a fresh low, the trajectory subsequently remains upward sloping.

“This, in conjunction with the stronger-than-expected GDP growth in Q1 FY2026, and the positive impact of the GST reforms on growth in the later quarters, suggests a status quo for the repo rate in the October 2025 policy review,” Nayar added.

Naval Kagalwala, chief operating officer and head (products) at Shriram Wealth, said, “We expect the RBI MPC to stay put on rates in the upcoming meeting, though revisions in CPI projections (following GST rate rationalisation) and tweaks to underlying assumptions will be closely watched, given the sharp depreciation in the Indian rupee and ongoing geopolitical uncertainty.”