Despite high GDP growth, RBI may go ahead with rate cut

Experts believe economy may lose momentum in second half of the year, calling for monetary support at a time when inflationary pressures have sharply eased

- BENN KOCHUVEEDAN @ Mumbai

DESPITE India’s Q2 FY26 GDP growth surprising at 8.2% — well above the Reserve Bank of India’s (RBI) projection of 7% — economists continue to expect a 25 bps rate cut in the first week of December.

Experts believe the economy may lose momentum in the second half of the year, calling for monetary support at a time when inflationary pressures have sharply eased.

Radhika Rao, Senior Economist at DBS Bank, said the Monetary Policy Committee (MPC) faces a tricky decision in the upcoming policy review, given the mix of strong growth and record-low inflation. “We expect an emphasis on forward-looking growth guidance and a high real rate buffer due to weak inflation, to justify a move to lower rates further,” she said.

The RBI has so far cut the repo rate by 100 bps since February.