Why RBI might announce another rate cut by year-end
What's the story
Goldman Sachs has predicted another policy rate cut before the end of this year. The prediction comes in light of recent Goods and Services Tax (GST) simplifications, which suggest that peak fiscal consolidation is behind us. The report also highlights how these factors, along with domestic regulatory easing, could lead to a gradual recovery in credit demand.
Economic outlook
Report warns of external factors tempering credit demand
The report from Goldman Sachs noted that the Reserve Bank of India's (RBI) recent measures are likely to ease supply-side credit conditions. However, it also warned that the extent of incremental lending will depend on demand dynamics in the broader economy. External factors like tighter US immigration costs for H-1B visas affecting Indian IT services, and high US tariff on Indian goods could temper credit demand amid macro uncertainty.
Monetary policy
MPC keeps repo rate unchanged at 5.5%
In its latest meeting, the Monetary Policy Committee (MPC) of the RBI unanimously decided to keep the policy repo rate unchanged at 5.5%. The decision comes amid external headwinds weighing on India's outlook and a good monsoon season that has led to an upward revision in growth projections for FY26.