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Below the Comment on expectations from RBI monetary policy later this week by Ajay Garg, CEO & Director, SMC Global Securities

The RBI’s December meet scheduled this week is drawing strong market attention, with expectations tilting toward a continuation of the central bank’s gradual shift toward a softer stance. Easing inflation driven by GST rate cuts, sustained food-price deflation, and a steady decline in core inflation have strengthened hopes that the RBI may prepare the ground for a rate cut in early 2026, even if it chooses to hold rates this time at 5.5% for now. This is supported by a robust economic backdrop as India’s real GDP grew by 8.2% in Q2 FY26, the fastest pace in six quarters despite tariff-related headwinds. CPI inflation also dropped to a record low of 0.25% in October, comfortably below the RBI’s tolerance band.

Besides, markets are also tracking global cues closely, particularly expectations of US Fed rate cuts, which have already improved risk appetite across emerging markets. A stable global backdrop, moderating bond yields, and the prospect of steady foreign institutional inflows support the view that the RBI may maintain a supportive tone. This time, the focus might be on improving liquidity conditions and balancing inflation control with sustaining growth momentum, potentially setting the stage for a more accommodative policy path ahead

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