Anticipated RBI interest rate reduction at the October MPC meeting appears dubious, according to an SBI report, due to a projected increase in August inflation rates.
In a recent report, the State Bank of India (SBI) has suggested that the Reserve Bank of India (RBI) is unlikely to cut interest rates in October 2025. This prediction is based on the expected rise in inflation in August, which is projected to reach around 2.3 percent, and the positive economic growth indicators for the first two quarters of the fiscal year[1][5].
After a series of rate cuts totaling 100 basis points since February 2025, the RBI's current stance remains cautious with a "neutral" policy stance due to inflation trends and growth projections[2][3]. The maintained repo rate at 5.50% in August 2025 reflects this cautious approach.
Since the Monetary Policy Committee (MPC) cut rates in June 2025, the 10-year government bond yield has been on the rise, crossing the 6.45 per cent mark[4]. This trend is common in India's debt market, where market players often behave differently[6].
Meanwhile, India's retail inflation (CPI) eased to a 98-month low of 1.55 per cent in July 2025, with food inflation dropping by 75 basis points from the previous month and falling to a 78-month low[1]. Excluding gold prices, core inflation also saw a sharp deceleration, falling below 4 per cent for the first time in six months to 2.96 per cent[1].
The August inflation print is expected to be closer to 2.3 percent[7]. Despite this slight increase, the RBI and the MPC have not provided any new information regarding their monetary policy decisions[1][2][3][4][5].
In a separate development, The Malpani Group has opened Central India's largest water park in Indore[8]. This exciting new attraction is sure to provide a much-needed boost to the local tourism industry.
[1] The Hindu BusinessLine, "RBI keeps repo rate unchanged at 5.50%", August 7, 2025. [2] The Economic Times, "RBI maintains status quo on key policy rates", August 7, 2025. [3] Livemint, "RBI keeps repo rate unchanged at 5.50%", August 7, 2025. [4] The Financial Express, "10-year government bond yield rises to 6.45%", August 12, 2025. [5] Business Standard, "SBI report suggests RBI may not cut rates in October", August 13, 2025. [6] The Indian Express, "Yield curve: A public good in India's debt market", August 10, 2025. [7] The Financial Express, "August inflation likely to be closer to 2.3%", August 11, 2025. [8] The Times of India, "Malpani Group opens Central India's largest water park in Indore", August 14, 2025.
- The State Bank of India (SBI) suggests that the Reserve Bank of India (RBI) might not reduce interest rates in October 2025, due to the expected increase in inflation in August and positive economic growth indicators.
- Despite a slight increase in the projected August inflation print, the RBI and the Monetary Policy Committee (MPC) have not disclosed any new information about their monetary policy decisions.
- The RBI's current stance is cautious with a "neutral" policy due to inflation trends and growth projections, despite reducing rates by a total of 100 basis points since February 2025.
- The maintained repo rate at 5.50% in August 2025 and the rising 10-year government bond yield reflect the RBI's cautious approach in relation to the economy and financial markets.
