Abhishek Sinha
1 October 2025 | By Niveshvani.in
The Reserve Bank of India (RBI) held the repo rate steady at 5.50% in its October Monetary Policy Committee (MPC) meeting, with all members voting unanimously in favor. The stance was retained at “Neutral,” though two external members argued for a shift to “Accommodative.”
According to Abhishek Bisen, Head – Fixed Income, Kotak Mahindra Asset Management Company (AMC), the outcome was broadly in line with market expectations, but the guidance has tilted the tone towards dovishness.
Inflation Falls, Growth Holds Above 6%
Mr. Bisen highlighted that the RBI revised FY26 GDP growth projections upward to 6.8% from 6.5% (Aug’25 forecast), signaling resilience in economic momentum. At the same time, headline inflation projections were slashed to 2.6% from 3.1%, reflecting the impact of GST rate cuts and benign food inflation.
For FY27, headline inflation for Q1 was also revised lower to 4.50%, down from 4.90% projected in August. This reassures the MPC that inflationary concerns are easing, creating scope for policy flexibility.
MPC Leaves Room for Rate Cuts
Mr. Bisen noted that RBI Governor acknowledged policy space for easing, pointing to the twin factors of GST-led inflation moderation and growth still below aspirations. However, he stressed that the MPC would closely monitor global economic developments and the impact of GST rationalisation on domestic consumption before acting.
“The market has read the policy as neutral to dovish,” said Mr. Bisen. “We expect the RBI to ease policy rates by 25 basis points in the next MPC meeting.”
Market Implications
The dovish undertone of the policy is expected to anchor bond yields and support investor sentiment, particularly in fixed income markets. With the RBI signaling that easing could be on the horizon, traders and investors are likely to position themselves for a rate cut in the near term.
✅ Commentary Courtesy: Abhishek Bisen, Head – Fixed Income, Kotak Mahindra AMC
