Repo rate: Can home loan borrowers expect another cut from RBI? Here's what SBI Research says

As the Reserve Bank of India’s Monetary Policy Committee (MPC) meets from December 3 to 5, 2025, market participants are keen to know whether a rate cut is on the cards. However, the latest SBI Research Report signals that the chances of any reduction in policy rates are very low.

What this means for home loan borrowers

"To support market sentiment and anchor long-term yields, RBI may consider a liquidity-neutral Operation Twist in Government Securities (G-Secs) and State Development Loans (SDLs) to reduce volatility and restore stability in the yield curve, SBI Research Report said.

"Following RBI’s 100 bps cumulative reduction in repo rate since Feb’2025, banks have adjusted their lending and deposit rates downwards in H1FY26. However, the latest data of October indicate that all bank groups have increased lending rates on fresh loans (WALR_fresh) by 09-18 bps, while reducing fresh deposits rates by 04-05 bps," the report added.

SBI Research report notes that global central banks have already moved into a phase of policy pause, and although rate cuts still outnumber hikes, the overall number of rate actions has sharply dropped. The report states: “monetary policy has entered a phase of pause… number of rate decisions, while still dominated by cuts, are far less in count.”

Domestically, expectations of a shallow 25-basis-point cut have faded after stronger-than-expected Q2 GDP data. SBI observes that “the choice [is] tilted in favour of pause in policy,” particularly because monetary transmission remains weak. Despite a cumulative 100-basis-point rate cut earlier in the year and significant CRR reductions, the bond market is still dislocated. The spread between the overnight repo rate and the ten-year G-Sec yield has widened sharply, signalling liquidity distortions and limiting the case for further easing.

SBI also highlights that historically, rate cuts during a neutral stance are uncommon, with the probability averaging just 27 percent. This further reinforces the likelihood that the MPC will maintain its policy stance.