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Fitch’s BMI Sees RBI Repo Rate Holding at 5.25% in FY27

11 December 20251 min read
ECONOMYFitch’s BMI SeesRBI Repo RateHolding at 5.25% inFY2711 December 2025safalsetu.com

Why in the news

A BMI note said the RBI will likely pause after its December cut and hold the policy rate for all of the next fiscal year.

Key facts

  • Repo rate: 5.25% through FY2026-27, close to its terminal level.
  • Easing in 2025: 125 bps in total, after sharp tightening in 2022-23.
  • Rupee forecast: about ₹90 at end-2025 and ₹90.5 in 2026.

Reasoning

  • CPI inflation has dropped sharply, leaving room for an accommodative stance.
  • Strong consumption and investment keep GDP resilient: a “Goldilocks” phase.

Risks

  • Long trade disputes with the US could hurt exports through tariffs and weigh on growth and the rupee.
  • An inflation rebound or currency slide could alter rate decisions.

Test yourself

1. What repo rate does BMI (Fitch Solutions) expect the RBI to maintain through FY2026-27?

BMI sees the rate staying at 5.25%, near its terminal level.

2. By how much did the RBI cut rates cumulatively in 2025, according to the BMI note?

The note cites cumulative cuts of 125 bps in 2025.

3. Which term does Fitch use for low inflation combined with resilient growth in India?

The note calls the environment a Goldilocks phase.

This topic is part of Daily Current Affairs 11 December 2025 (18 topics).

All topics of the dayDay quizDecember 2025

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