RBI Rate cut: The Reserve Bank of India delivered a 25 bps rate cut, lowering the repo rate to 5.25% in a unanimous decision that reflected unusual confidence in the disinflation trend. With CPI inflation now projected at just 2% for FY26, brokerages believe the central bank has moved decisively into a pro-growth mode—raising the question: Is another rate cut coming in 2026?
The RBI held its stance at neutral (5:1 vote), while simultaneously announcing aggressive liquidity support through ₹1 trillion of OMOs and USD 5 billion in 3-year buy–sell swaps.
But the real debate brewing in the market is whether today’s cut marks the beginning of a cycle—or the last move for now.
Will ther be another rate cut in 2026?
Most research firms interpreted the policy as clearly accommodative. Nuvama Institutional Equities argued that the central bank is preparing the ground for smoother transmission and potentially more easing if global conditions weaken. According to the brokerage, “We anticipate at least an additional 25 bps rate cut in this cycle, particularly if global trade slows down.”
Nuvama also noted that while consumption is set to outpace exports and domestic capex, a broad-based pickup in demand remains unlikely in the near term. This, combined with benign inflation, strengthens the case for another cut—though timing remains uncertain.
CareEdge Ratings, however, took a more cautious view. The ratings agency said the RBI acted at a moment when inflation pressures are minimal, giving it room to stimulate growth, but argued that the window for further easing may be narrow. CareEdge stated, “Even though there is scope for another 25 bps rate cut based on the inflation projection, we expect the MPC to pause and preserve the policy space for a future rate cut only if the growth outlook worsens.”
The agency highlighted that several drivers of early-year growth—such as an early festive season, GST rationalisation effects, and export front-loading—may not repeat in the coming quarters. With external risks rising and U.S. tariffs continuing to pressure exports, the RBI may prefer to conserve ammunition.
Macro Signals Favour Easing
India’s macro data has strengthened the argument for more easing. GDP grew 8.2% in Q2 FY26, after 7.8% in Q1, driven by robust manufacturing and continued services momentum. Consumption has responded well to inflation cooling and tax rationalisation, while the festive season provided an early lift.
The inflation backdrop is even more compelling:
- CPI fell to 0.3% in October 2025
- Food and beverages category moved into deflation
- Inflation excluding precious metals stands at 2.5%
- The RBI’s own inflation estimate for FY26 is now 2%
These conditions would normally justify additional rate cuts.
Yet fiscal realities could stand in the way. With the government prioritising consolidation, the MPC may be cautious about overcommitting monetary easing in case downside risks materialise later in the year.
Brokerages broadly agree on one point: the RBI has created space for another cut, but whether it uses it will depend on external shocks, consumption trends, and global trade conditions.
So, Will There Be One More Rate Cut in 2026?
If global demand wanes, or if domestic growth loses momentum in H2 FY26, the RBI could deploy another 25 bps cut as Nuvama expects. But if growth holds steady, the central bank may do exactly what CareEdge predicts—pause and preserve firepower for later.
For now, the RBI has opened the door to more easing. Whether it walks through that door will depend on how the next few months unfold.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.