On terminal policy repo rate, Street views are evenly split

Respondents who see terminal rate at 5.25% expect 25 bps cut in Oct or Dec

- ANJALI KUMARI & MANOJIT SAHA

The street is evenly split on the terminal policy repo rate in the current interest rate easing cycle with half of the respondents in a Business Standard poll reckoning it to be 5.25 per cent, while the other half expect it to stay at 5.50 per cent.

The Reserve Bank of India's Monetary Policy Committee (MPC) had cut the policy repo rate by 50 basis points (bps) to 5.50 per cent in the June meeting, higher than the market expectation of 25 bps, and changed its stance to 'neutral' from 'accommodative'. RBI Governor Sanjay Malhotra had said monetary policy is left with limited space to support growth after cutting the repo rate by 100 bps 'in quick succession' since February.

In an interview to Business Standard on Tuesday Malhotra said if the inflation outlook turns out to be below RBI projections, it will open up policy space. CPI inflation eased to 2.82 per cent in May 2025—lower than street estimate, it's lowest reading since February 2019.