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Will RBI cut rates in 2026? Here's what experts say
08 Dec 2025

The Reserve Bank of India (RBI) has surprised markets by cutting the repo rate by 25 basis points (bps) to 5.25%.

The move comes as a sign of confidence in the disinflation trend, with Consumer Price Index (CPI) inflation projected at just 2% for FY26.

Now, financial brokerages are weighing in on whether another rate cut could be on the cards for 2026.

Brokerages weigh in on potential rate cuts
Market predictions

Most research firms have interpreted RBI's recent policy as clearly accommodative.

Nuvama Institutional Equities believes that the central bank is preparing for smoother transmission and possibly more easing if global conditions weaken.

They anticipate at least another 25bps rate cut in this cycle, especially if global trade slows down.

However, CareEdge Ratings suggests that while there is room for another cut, the MPC may choose to pause and preserve policy space for future rate cuts only if growth outlook worsens.

India's macro data supports case for more easing
Economic indicators

India's macroeconomic data has strengthened the case for further easing. GDP grew by 8.2% in Q2 FY26, after a 7.8% growth in Q1, driven by strong manufacturing and services momentum.

The inflation backdrop is also compelling with CPI falling to 0.3% in October and food & beverages category moving into deflation.

These conditions usually warrant additional rate cuts, but fiscal realities could pose challenges as the government prioritizes consolidation over aggressive monetary easing amid potential downside risks later this year.

RBI's future course of action remains uncertain
Factors

Brokerages broadly agree that the RBI has created room for another cut, but whether it will use this space depends on the external shocks, consumption trends, and global trade conditions.

If global demand weakens or domestic growth slows down in H2 FY26, another 25bps cut could be on the cards as Nuvama expects.

However, if the growth remains steady, the central bank may choose to pause and preserve firepower for later as CareEdge predicts.