RBI Repo Rate: The next Monetary Policy Committee (MPC) meeting of the Reserve Bank of India (RBI) will be held from September 29 to October 1, 2025.
During this meeting, the RBI will announce its decision on the repo rate and outline its next monetary policy steps.
Ahead of this, SBI Research has released a report urging the central bank to cut interest rates by 25 basis points (bps). The report warns that not reducing rates now would be a missed opportunity.
The report highlights that in the current domestic and global economic environment, if the RBI does not act, it would be a Type 2 error—a situation where a chance to take the right decision is lost.
It also mentions that yields have recently risen in both Indian and international markets, making it important for the RBI to clearly and carefully communicate its policy direction.
Why a Rate Cut Is Needed
In June 2025, the RBI reduced policy rates. Soon after, market yields began rising, creating challenges for investors and financial institutions.
SBI Research argues that another 25 bps cut in September would support the Indian economy. The report states that with GST changes and low inflation, this is the right time to ease rates.
Inflation has remained stable since June, with the Consumer Price Index (CPI) expected to stay close to 4% or below in FY27.
Because of the GST changes, inflation could even drop to 1.1% in October, the lowest level since 2004.
The MPC meeting is scheduled for September 29–30, and RBI Governor Sanjay Malhotra will announce the new repo rate on October 1, 2025.
What Is a Type 2 Error?
A Type 2 error refers to a mistake in analyzing data, where the correct conclusion is missed.
In this case, SBI Research warns that if the RBI avoids cutting rates despite low inflation, it would amount to such an error.
The report stresses that this would be a major lost opportunity for the economy.
Repo Rate Status
Currently, the repo rate stands at 5.50%. No change was made in the August policy meeting, while in June, the RBI cut rates by 50 bps.
If rates are cut this time, loans from banks will become cheaper, lowering the EMI burden for borrowers.
