India’s inflation has cooled sharply, giving the Reserve Bank of India (RBI) more space to support growth. With food prices deflating and GST cuts easing costs, expectations for another rate cut are rising.

The RBI adopted a dovish tone in the October 2025 policy statement, and the continued softening of inflation and food prices makes a strong case for the RBI to pare rates further to support growth and liquidity. Food prices, a major component of India's inflation basket, have seen sustained deflation, and GST rate cuts have further eased price pressures.

Shubham Gupta, CFA, co-founder of Growthvine Capital, says, "India’s headline inflation had fallen to multi-decade lows, reflecting broad-based food disinflation and recent GST-led softening across many categories. Given that real interest rates are now elevated and policy space is comfortable, the grounds for easing remain strong."

It is pertinent to note that the RBI will not move merely on headline inflation alone. Core inflation remains sticky across certain pockets, growth momentum is still robust, and global tail risks such as volatile commodity prices and external demand pressures cannot be ruled out.

"If Q2 growth figures indicate ongoing economic weakness or if rural incomes and demand continue to falter, this will likely support a rate cut," says Saurabh Bansal, Founder, Finatwork Investment Advisor, a SEBI RIA (Registered Investment Advisor.

"Slowing exports and global trade tensions are creating economic headwinds, influencing domestic growth. The global monetary environment, especially moves by major central banks towards easing, may influence RBI decisions to maintain financial stability and competitive interest rates."

Adding to this, Gupta says, "Our assessment remains that a first cut of 25 basis points is on the cards at the upcoming meeting, with scope for a further 25 bps reduction in early 2026, possibly February, assuming inflation stays benign and global conditions remain stable."

Basically, "India goes into this MPC meeting with two positives: growth is holding up well, and inflation has stayed below the 4% target for many months," said Amit Suri, Mutual fund distributor & founder of AUM Wealth. "This gives the RBI some space to support the economy without worrying too much about rising prices. GDP growth is now expected to be around 6.8%, and both food and core inflation remain soft. With the repo rate at 5.5% after earlier cuts, we expect one last 25 bps cut to 5.25%. Even if this happens, the RBI will stay cautious and data-driven, focusing on maintaining stability while helping growth gradually," added Suri.

In summary, the interplay between record-low inflation, moderate growth projections, weakening trade, and fiscal-monetary coordination will be decisive in the RBI's December 2025 decision on the repo rate.