FX.co ★ RBI Sees Room to Cut Rates as Inflation Outlook Improves

The minutes from the Reserve Bank of India's October 2025 meeting, released on Wednesday, indicate that members of India's interest-rate panel see potential for future rate reductions as the nation's inflation outlook becomes more favorable. Earlier this month, the six-member Monetary Policy Committee maintained the key repo rate at 5.50% following a 100 basis point cut in 2025. The committee upheld a "neutral" policy stance, though two members suggested a shift towards an "accommodative" approach. RBI Governor Sanjay Malhotra noted in the minutes, "The positive outlook for both headline and core inflation, prompted by the revised downward projections, creates policy space to further bolster growth." Annual inflation dropped to an eight-year low of 1.54% in September. Consequently, the central bank reduced its inflation forecast for the fiscal year 2025–26 to 2.6%, down from 3.1% in August and 3.7% in June, while also adjusting the GDP growth forecast upward to 6.8% from 6.5%.