The Monetary Policy Committee (MPC) of the Reserve Bank of India will start its three-day long sitting in Mumbai this evening to determine the policy rates.

The committees members will meet discuss and deliberate on the repo rates and examine the current economic conditions before making a decision.

The meeting is scheduled to continue for three days, after which the announcement of the monetary policy outcome will be made on Wednesday, October 1.

The focus of the meeting will be on assessing the current state of the economy and determining whether any changes are required in the key policy rates to support growth while managing inflation.

RBI Governor Sanjay Malhotra will announce the outcome of the meeting on Wednesday at 10 AM.

The announcement will provide clarity on the committee's decision regarding the repo rates and other related policy measures. The monetary policy outcome is closely watched by markets, businesses, and policymakers for its impact on borrowing costs and overall economic activity.

In the last August policy meeting, in a unanimous decision, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.5 per cent.

According to a report by State Bank of India, the Monetary Policy Committee (MPC) may announce a 25 basis points (bps) cut in this policy meeting as it is the best possible option at this stage.

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The report highlighted that there is both merit and rationale in going for a rate cut in September, as inflation remains under control and the outlook suggests further moderation.

It stated, "Central Banks' communication sans cacophony is a policy tool unto itself amidst all the chaos. No point in committing a Type 2 error (No rate cut with Neutral Stance) in September also. A 25 bps rate cut in September is the best possible option for RBI."

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The SBI report highlighted that post-June, the bar for rate cuts has become higher, and any such decision will require calibrated communication by the central bank.

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However, it emphasized that inflation is expected to remain benign even in FY27. Without any Goods and Services Tax (GST) cut, inflation is already tracking below 2 per cent in September and October.