• Source:JND
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The Reserve Bank of India (RBI) Governor Sanjay Malhotra will make the announcement regarding the repo rate on Friday as the Monetary Policy Committee (MPC) meeting is set to be concluded. The nation expects a cut in the repo rate, which is currently at 5.5% as it would lower the interest rates in the country across the loan segments.

Earlier, it was expected that the repo rate might be lowered due to easing inflation. However, in the wake of fresh GDP data, the possibility got a setback.

Domestic brokerage firm JM Financial has released a report on the RBI policy. It stated that the central bank faces a difficult task in focusing on its dual responsibility of maintaining price stability while supporting growth. Markets and experts are divided on the RBI's monetary policy for December.

What JM Financial said in its report?

The RBI's MPC meeting began on December 3, and Governor Sanjay Malhotra will announce the outcome rate on December 5 at 10 AM. "We expect the RBI to raise its FY26 growth forecast by at least 20 basis points to 7% and reduce its inflation forecast by 40 basis points to 2.2%," the domestic brokerage firm said in its report.

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A rate cut at this time would boost the expected softer growth in the second half of FY26, but it also poses a risk of further rupee depreciation.

If the rate cut is not accompanied by a dovish stance, bond yields will fall further. In such a scenario, the RBI may adopt a middle ground by maintaining the status quo and providing guidance on policy support in the coming months.

Meanwhile, some analysts believe a 25 basis point interest rate cut could support the economy at a time when price pressures are low. Some investors are placing more importance on the RBI's commentary than on the repo rate cut itself.

Yes Bank predicts stagnant rate

In its report, YES Bank stated that the RBI is expected to keep the policy repo rate unchanged at 5.5 per cent and maintain its existing stance.

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The report emphasised that the central bank is likely to remain on pause as the scope for incremental cuts is limited, making it a "touch-and-go" policy where the decision could swing either way.

It stated "We expect the RBI to stay on a pause in December and keep rates and stance unchanged".

(With ANI Inputs)

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