Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday signaled potential easing in monetary policy, stating there is "scope" for a repo rate cut at the upcoming Monetary Policy Committee (MPC) meeting in December, amid signs of cooling inflation and robust economic growth. Speaking at an event in Mumbai, Das emphasized that the decision would be data-driven, hinging on sustained progress toward the RBI's 4% inflation target. This comes as India's retail inflation eased to a five-year low of 4.7% in September 2025, while gross domestic product (GDP) expanded by an impressive 7.2% in the July-September quarter, surpassing market expectations. The RBI has maintained the benchmark repo rate at 6.5% since February 2025, following a series of hikes to combat post-pandemic inflationary pressures, but recent global and domestic factors have shifted the outlook toward accommodation.

Das's comments mark a notable pivot from the central bank's earlier cautious stance, reflecting improved macroeconomic stability despite lingering risks from volatile food prices and geopolitical tensions. He highlighted that core inflation—excluding food and fuel—has remained below 4% for several months, providing the MPC with room to maneuver without jeopardizing price stability. The governor also underscored the resilience of India's services sector, which contributed significantly to the quarterly GDP surge, alongside steady private consumption and investment inflows. This aligns with the RBI's latest projections, which forecast average inflation at 4.8% for the fiscal year 2025-26 and GDP growth at 7.0%, up from earlier estimates. Market analysts interpret Das's remarks as a prelude to a possible 25-basis-point reduction in the repo rate, which could lower borrowing costs for businesses and households, stimulating further economic activity.

The anticipated rate adjustment arrives at a critical juncture for India's economy, which is navigating a delicate balance between growth acceleration and external headwinds such as a strengthening US dollar and supply chain disruptions. A December cut would be the first in nearly two years, potentially boosting sectors like real estate, automobiles, and small enterprises that have been sensitive to high interest rates. However, Das cautioned that any easing must be gradual to avoid reigniting inflationary impulses, particularly from monsoon-dependent agriculture. Economists note that this move could enhance the rupee's appeal to foreign investors, supporting capital market inflows amid a global environment of divergent central bank policies—the US Federal Reserve having already initiated cuts, while the European Central Bank remains watchful.

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Broader implications extend to fiscal policy coordination, as the government eyes infrastructure spending to sustain momentum ahead of the 2026 budget. Das reiterated the RBI's commitment to financial stability, pointing to improved asset quality in banks and a decline in non-performing assets to historic lows. As the MPC convenes from December 3 to 5, investors and policymakers alike will scrutinize incoming data, including October's inflation print and high-frequency indicators. This prospective easing underscores India's optimistic trajectory in a world of uneven recovery, positioning the nation as a bright spot in emerging markets while reinforcing the central bank's proactive role in fostering inclusive growth.

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