BoB Predicts RBI Will Keep Repo Rate Steady at 5.50% This December

Bank of Baroda (RBI) expects to keep the Repo Rate at 5.50 per cent at the next RBI Monetary Policy Announcement on Friday, with a neutral monetary policy stance.

"We expect that the RBI will keep the Repo Rate unchanged at 5.50 percent in December 2025 and will maintain a neutral policy stance".

As a result of continuing economic growth in India during Q2 of FY26, with an 8.2 percent increase in GDP, which was higher than market expectations, the continuing momentum in Q3 is likely due to improved urban consumption and strong rural demand.

The RBI report noted that private sector investment appears to be recovering with increased credit demand supporting this trend.

On the inflation front, the report indicates that inflation is moderating dramatically. For example, in October, 2025, the CPI (Consumer Price Index) declined to a historically low of 0.25 percent due to decreased food prices. Furthermore, inflation is likely to continue decreasing, possibly below the estimates of the Reserve Bank of India.

More favourable moisture conditions, prompt intervention on the supply side, and an improved agricultural production outlook have all contributed to the positive change in food inflation going forward.

According to the report, the reason/(s) driving core inflation still above 4 percent is due in large part to rising gold prices rather than rising demand for gold, although lower GST rates have helped to mitigate some of the negative inflation impact associated with higher gold prices.

The improved outlook for food inflation offers the opportunity for interest rates to be cut, while the report concluded the RBI will remain vigilant and cautious in its 3rd/4th December meeting, especially with ongoing economic strength being maintained.

The October meeting of the Monetary Policy Committee (MPC) concluded with the policy repo rate being maintained at 5.5 percent with no dissent among the committee members.

The forthcoming MPC meeting is scheduled for December 3-5, and an announcement regarding the monetary policy is scheduled for December 5th at 10 AM, from RBI Governor Sanjay Malhotra.

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Experts Viewpoint

Ankur Jalan, CEO, Golden Growth Fund (GGF), a category II Real Estate-focused Alternative Investment Fund (AIF)

From depositors’ standpoint, a rate cut will create concerns about declining returns on fixed deposits and other interest-bearing savings. A 25-bps reduction in the repo rate would likely push banks to trim deposit rates in the coming months, making it harder for savers to earn meaningful returns. While lower rates may support broader economic growth, affluent investors and family offices often redirect capital toward higher-return products such as real estate–focused Category II AIFs to preserve real yields, thereby improving fundraising momentum for these funds. A lower interest-rate environment also reduces the cost of capital for developers and strengthens project viability, which in turn expands the opportunity for AIFs.

Lalit Parihar, Managing Director, Aaiji Group, a Dholera-based real estate firm

Between June and now, several macroeconomic factors have evolved in favour of a rate cut. CPI inflation has fallen well below the RBI’s comfort zone, and - complemented by recent GST rationalisation - consumer spending has received a boost. We believe that with another 25-bps cut in the repo rate in this MPC meeting, India’s growth trajectory will strengthen further. The housing market has already benefited from the RBI’s liquidity measured and 100 bps of cut in repo rate between February and June, and it is time to make borrowing more accessible and affordable for homebuyers.

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Vijay Harsh Jha, Founder and CEO of Property Brokerage firm VS Realtors

The housing market has shown signs of a slowdown in terms of volumes. Although sales values have grown - driven largely by rising prices - this trend indicates that shifting demand dynamics may gradually crowd out genuine homebuyers. A 25-bps rate cut would encourage fence-sitters to enter the market, especially as developers have indicated a pipeline of more affordable inventory in the coming quarters.