<p>New Delhi: The Reserve Bank of India (RBI) is likely to cut policy repo rate by 25 basis points (0.25 per cent) in its upcoming monetary policy review scheduled to be announced on October 1, the SBI Research said on Monday.</p>.<p>In a special report ‘prelude to MPC meeting’, SBI Research said a 25 basis points rate cut is the “best possible option for the RBI.”</p>.<p>The RBI’s Monetary Policy Committee (MPC) is scheduled to start three-day deliberations on policy rates on September 29. The decision will be announced on October 1.</p>.GST 2.0 Rollout Begins: Here's what could cost you less.<p>“There is merit and rationale in going for a September rate cut. This will but require calibrated communication by the RBI as post June the bar for rate cut is indeed higher,” SBI Research said.</p>.<p>The RBI has lowered key policy interest rates by 100 basis points since February. It was cut by 25 basis points each in February and April and by 50 basis points in June. After three consecutive cuts the RBI hit a pause button in August.</p>.<p>SBI Research said the central bank must lower policy rates in the upcoming review as inflation is likely to remain benign even in 2026-27.</p>.<p>The headline retail inflation based on the Consumer Price Index (CPI) stood at 2.07 per cent in August. It was at an eight-year low of 1.61 per cent in July.</p>.<p>We believe that the bottom of CPI inflation may not yet reached, and it may further decline by 65-75 bps due to the huge GST rationalization, SBI Research said.</p>.<p>Experience of 2019 also indicates that the rate rationalisation (primarily focused on reducing rates for common goods to 18 per centper cent from 28 per cent) led to almost 35 bps decline in overall inflation in just a couple of months, it said.</p>.<p>“Additionally, with the new CPI series we expect further moderation of 20-30 bps in CPI. All these factors (GST, base revision) indicate that CPI inflation will remain around the lower end of inflation target (4+2 per cent) for the entire FY26 and FY27,” it added.</p>
<p>New Delhi: The Reserve Bank of India (RBI) is likely to cut policy repo rate by 25 basis points (0.25 per cent) in its upcoming monetary policy review scheduled to be announced on October 1, the SBI Research said on Monday.</p>.<p>In a special report ‘prelude to MPC meeting’, SBI Research said a 25 basis points rate cut is the “best possible option for the RBI.”</p>.<p>The RBI’s Monetary Policy Committee (MPC) is scheduled to start three-day deliberations on policy rates on September 29. The decision will be announced on October 1.</p>.GST 2.0 Rollout Begins: Here's what could cost you less.<p>“There is merit and rationale in going for a September rate cut. This will but require calibrated communication by the RBI as post June the bar for rate cut is indeed higher,” SBI Research said.</p>.<p>The RBI has lowered key policy interest rates by 100 basis points since February. It was cut by 25 basis points each in February and April and by 50 basis points in June. After three consecutive cuts the RBI hit a pause button in August.</p>.<p>SBI Research said the central bank must lower policy rates in the upcoming review as inflation is likely to remain benign even in 2026-27.</p>.<p>The headline retail inflation based on the Consumer Price Index (CPI) stood at 2.07 per cent in August. It was at an eight-year low of 1.61 per cent in July.</p>.<p>We believe that the bottom of CPI inflation may not yet reached, and it may further decline by 65-75 bps due to the huge GST rationalization, SBI Research said.</p>.<p>Experience of 2019 also indicates that the rate rationalisation (primarily focused on reducing rates for common goods to 18 per centper cent from 28 per cent) led to almost 35 bps decline in overall inflation in just a couple of months, it said.</p>.<p>“Additionally, with the new CPI series we expect further moderation of 20-30 bps in CPI. All these factors (GST, base revision) indicate that CPI inflation will remain around the lower end of inflation target (4+2 per cent) for the entire FY26 and FY27,” it added.</p>