It’s Day 2 of the Reserve Bank of India’s Monetary Policy Committee’s December meeting. The RBI decision on interest rates will be announced on Friday. Markets are keenly awaiting the outcome as the Indian rupee recently hit a lifetime low, crossing the 90 mark. However, GDP growth remained strong at 8.2% in Q2, and CPI inflation fell to a multi-year low in October.
Crisil expects 25 bps repo rate cut
Analysts see room for rate cut. “We anticipate a 25-basis-point cut in the repo rate in December. While growth remains robust, a significant decline in retail inflation in October has created additional room for this adjustment,” said Crisil Chief Economist Dharmakirti Joshi.
Split MPC not ruled out: Emkay Global
Emkay Global also believes that the RBI should cut interest rates in December. “We think the case for a December cut is stronger, but a split MPC cannot be ruled out,” the firm noted.
The analyst highlighted three factors suggesting that the RBI may act sooner rather than later: 1) Inflation has undergone another sharp downward reset. 2)Near-term GDP prints could turn noisy. 3) The rupee can act as an automatic stabiliser, so its weakness should not delay easing.
However, it is important to note that Emkay’s report was released on December 1—before the rupee hit its lifetime low.
LKP Securities expect RBI to intervene as Rupee tumbles
The rupee fell below 90. Analysts say the lifetime low was largely driven by the lack of clarity on the India–US trade deal, coupled with record-high bullion and metal prices that have worsened the import bill. Jateen Trivedi, VP and Research Analyst – Commodity and Currency at LKP Securities, said, “Higher US tariffs and limited RBI intervention have added to the pressure.”
“With the RBI policy due on Friday, markets will look for cues on whether the fall will stabilise. Technically, the rupee remains oversold and needs to reclaim 89.80 to recover meaningfully,” he noted.
RBI May Need to Infuse Rs 2 Trillion to Ease Liquidity Crunch: Emkay Global
The analyst also noted that the RBI may need to act on liquidity, as the banking system is currently facing a shortage. Emkay Global said, “Our liquidity model indicates that the impending moderation in liquidity could bring levels down to as low as 0.2–0.3% of NDTL by end-March 2026, without new primary infusion by the RBI.”
“We estimate that additional primary injections—mainly via Open Market Operations (OMOs)—of around Rs 2 trillion over the rest of FY26 will be required to keep liquidity near 1% of NDTL,” the report noted.
Earlier MPC meeting – A recap
The policy repo rate has been kept unchanged at 5.50% in the previous meetings (August and October 2025). Prior to these pauses, the RBI had cumulatively cut the repo rate by 100 basis points since February 2025.