The Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) is set to announce the decision of its October meeting today. While a rate cut remains unlikely, the committee may revise the inflation forecast in today's meeting.
Here are five key things you should know before the RBI's October MPC meet begins:
1. August 2025 MPC: A snapshot
During its August meeting, the MPC retained the repo rate at 5.5 per cent after slashing it by 100 basis points (bps) in three consecutive cuts since February. One basis point is a hundredth of a percentage point. The rate cuts brought down the repo rate from 6.5 per cent in February. The repo rate is the interest rate at which the RBI lends money to commercial banks.The central bank also revised its Consumer Price Index (CPI)-based inflation projections downward due to softer food prices and easing global commodity costs. In its August MPC meeting, RBI maintained its stance as 'neutral.' The stance was shifted from 'accommodative' to 'neutral' in the June MPC meeting.
2. Domestic economy indicators
Since the last MPC meeting held between August 4–6, several economic factors show that India has been recording strong growth. According to data released by the government, the gross domestic product (GDP) surpassed the August meeting expectations of 6.5 per cent by recording a strong growth of 7.8 per cent.
Meanwhile, the CPI inflation inched up to 2.07 per cent in August from 1.61 per cent in July. The Wholesale Price Index (WPI)-linked inflation rose to 0.52 per cent in August, from -0.58 per cent in July.In August 2025, the manufacturing PMI increased to 59.3, its highest level since February 2008. Services PMI also increased to 62.9, its highest level since June 2010. Even though the flash PMI fell to 61.9 in September from 63.2 in August, marking a modest slowdown, it still indicated a sharp rate of expansion.
3. Global headwinds
Trade ties between India and the United States remained under strain with 50 per cent tariffs in place. The additional duties, which included a penalty for buying Russian crude, came into effect on August 27, after the rate decision was announced.While both India and the US maintain that they share a strong relationship and a trade deal is being discussed, the two countries are yet to reach an agreement.Meanwhile, the US Federal Reserve cut its benchmark interest rate for the first time since December 2024 earlier this month, keeping the main lending rate at 4–4.25 per cent. The US Fed also signalled that more cuts were likely this year.
4. GST rate cut impact
On September 3, Union Finance Minister Nirmala Sitharaman announced the rollout of rationalised goods and services tax (GST) rates that bring different taxes under two main brackets of 5 per cent and 18 per cent, along with a special 40 per cent bracket for sin goods.Most daily-use and essential items, such as milk, paneer, packaged food, stationery, and farming equipment, were moved to the lower tax bracket of 5 per cent in order to boost consumption. The new rates, which came into effect starting September 22, are likely to pump ?2 trillion into the economy.Analysts believe that the GST revamp will moderate inflation and boost consumption, and therefore, the committee may maintain a status quo for the repo rate in the October 2025 policy review.
5. October MPC has a new member
The RBI appointed a new member, Indranil Bhattacharyya, executive director in charge of monetary policy, to the committee. He will be replacing the outgoing member Rajiv Ranjan.
The committee consists of six members. While three members of the committee are RBI officials, the remaining three are appointed by the government. Sanjay Malhotra, governor of RBI, serves as the ex-officio chairperson of the committee.
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