Can Borrowers Benefit Soon? RBI Repo Rate Cut Expectations Strengthen After Fresh CPI Data

The soft inflation print has pushed RBI repo rate cut expectations back into public conversation, with many awaiting a central bank decision on monetary policy.

Ever wondered how fast prices can come down before the system reacts. Retail inflation sat at 0.25 percent in October 2025, as the Reuters report released that month noted. India’s declining retail inflation made many people talk again about record low inflation and rate decisions, and the wait for some clear signal.

Is the RBI Repo Rate Cut Just Around the Corner?

The sharp fall in prices did not come out of nowhere. The same October 2025 report said food inflation slipped to minus 5.02 percent, while core inflation stayed closer to 4.4 percent. People in markets felt the mood shift. 

And it showed in the talk around the RBI stance on easing interest rates. Sometimes small drops change the tone much quicker than expected.

Inflation Numbers As Reported In Oct 2025

With these numbers, it’s clear that food inflation’s drastic drop has led to a growing RBI repo rate cut expectation among market participants. Some feel that a rate cut is imminent, while others remain cautious about the timing.

RBI Repo Rate Cut Expectations

The central bank aims to keep inflation within a set target range of 2% to 6%. When inflation stays too low for too long, the RBI is expected to ease rates to support economic growth. Given that current inflation levels are well below the target, the expectation for a repo rate cut has grown stronger.

Historically, when inflation falls below the lower target range, such as in this case with the sharp decline in food prices, discussions about a rate cut become louder. This is what many analysts are seeing in the current scenario.

How Past Data Relates to RBI Repo Rate Cut Expectations

The slide in prices did not begin in October. A Loansjagat article noted that inflation touched 1.54 percent in September 2025. That reading also sat below the lower band. The widening gap between the RBI repo rate and inflation has led to more discussions about what the central bank will do next.
 

So the gap widened quite fast. And it is this gap that keeps the central bank monetary policy outlook in public talk. Old cycles showed banks cut lending rates slow, even when inflation softened. The government often asked lenders to pass relief faster. Many may remember that. 

It feels the same pattern now. Core inflation at 4.4 percent also keeps the RBI steady at times. Past behaviour shows that quick cuts were rare when core stayed firm, even if headline dropped.

Conclusion

The decline in inflation, especially the significant drop in food prices, has raised hopes for a rate cut. RBI repo rate cut expectations are high, but the final decision will depend on the central bank’s assessment of economic conditions. Although inflation numbers point to a rate cut, the RBI is likely to take a cautious approach, as core inflation remains persistent.

People are closely watching for any signal from the RBI, as they await the next decision.

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LoansJagat Team

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