In what was expected to be a close call between a status quo and a rate cut, the Monetary Policy Committee (MPC) tilted in favour of the former when it met for its fourth bi-monthly policy meeting for FY2026. The decision to stay put on the repo rate was anchored on the need to see a further passthrough of the front-loaded 100 bps rate cuts earlier this year, as well as to wait for greater clarity around the impact of the GST rationalisation and persisting trade-related uncertainties.

The tone of the policy was relatively dovish. The statement clearly articulated that the current macroeconomic conditions and the outlook have opened up policy space for further supporting growth. This was particularly signalled by an expected downward revision in the CPI projections, owing to the GST ration

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