RBI Policy December 2025: Will MPC announce a rate cut on Friday, December 5? Here is what fund managers say

The experts are divided on whether the RBI will go for a rate cut.

For instance, Dharmakirti Joshi, Chief Economist at CRISIL, as reported by PTI, said, “We anticipate a 25-basis point cut in the repo rate in December. While growth remains robust, a significant decline in retail inflation in October has created additional room for this adjustment."

On the other hand, Divam Sharma, co-founder and fund manager at Green Portfolio PMS, notes that expectations of a rate cut have picked up recently as inflation has been easing and global monetary conditions are turning more supportive. However, the domestic macro picture is not as straightforward.

"The latest Q2 GDP growth of 8.2% has added a new layer of complexity for the RBI. What stands out is not just the headline number but the broad-based nature of the recovery. Manufacturing has shown a strong turnaround, and the services sector continues to hold up well. Interestingly, the numbers have beaten all the expectations. Together, these point to the economy gaining momentum after nearly six quarters of relatively softer growth," Sharma added.

In such an environment, a rate cut may not necessarily be the most prudent move right now, the fund manager added.

Sonam Srivastava, founder and fund manager at Wright Research PMS, said the upcoming RBI MPC meeting is one of the most finely balanced in recent years.

"Inflation has eased meaningfully, with both headline and core running well below the midpoint of the target band. At the same time, nominal GDP growth has softened, real rates have risen, and global central banks have already moved into an easing cycle. These factors create clear space for the RBI to consider a 25 bps cut as an early move in a broader normalisation path." Srivastava added.

What makes this meeting pivotal is that the macro trade-offs have shifted. The inflation battle is largely won for now, and the risks ahead tilt more toward supporting financial conditions and anchoring growth momentum, Srivastava said further.

Liquidity has tightened at the margin, credit demand is steady rather than exuberant, and the transmission of past rate hikes is largely complete.

"A calibrated cut would therefore not be stimulative in the traditional sense but more a signal that monetary policy is aligning with the new disinflation regime," the fund manager added.

Policy tone to watch out for

Whether the committee cuts now or waits till February, the tone will carry the bigger message. If the stance moves toward neutral or the commentary highlights sustained disinflation and easing global conditions, markets will treat this as confirmation that the easing cycle has begun, Srivastava noted.

Takeaways for markets

For markets, a rate cut is constructive. Bond yields would respond immediately, while equities would likely see strength in rate-sensitives such as banks, real estate, and consumer cyclicals.

The broader signal is that policy and macro conditions are finally pointing in the same direction, offering a more supportive backdrop for 2026, experts note.

RBI to remain cautious and data-dependent

Anil Rego, Founder and Fund Manager at Right Horizons PMS, says the RBI MPC meeting arrives at a pivotal moment for the economy, with expectations of a potential rate cut gaining momentum after the stronger-than-anticipated Q2 GDP print and a sharp easing in inflation.

The macro backdrop has turned increasingly supportive: growth remains broad-based across manufacturing, construction and financial services, while rural demand is showing early signs of recovery after favourable monsoons.

At the same time, headline inflation has fallen comfortably below the RBI’s 4% target for several months, giving policymakers greater flexibility than at any time in the past two years.

Against this setting, a calibrated 25 bps rate cut cannot be ruled out, Rego said.

That said, the RBI is likely to remain cautious and data-dependent. The central bank may prefer to preserve policy space until it gains greater clarity on global financial stability, food-price trajectories and the sustainability of the current disinflation trend. If the MPC opts to hold rates, the stance may still turn more explicitly growth-supportive, signalling that the door to easing is open.