Mumbai, October 20 (Udaipur Kiran): The Reserve Bank of India (RBI) may introduce one more policy rate cut before the end of this year, according to a recent report by Goldman Sachs. The report suggests that a combination of fiscal consolidation, regulatory easing, and gradual recovery in credit demand could prompt the central bank to adopt a more accommodative stance.
Goldman Sachs stated, “We expect another rate cut by the end of this year. The recent GST reduction indicates that the peak of fiscal consolidation is now behind us. Along with domestic regulatory easing, these factors are likely to support a gradual recovery in credit demand.”
The report further noted that the RBI’s recent measures are expected to improve supply-side credit conditions, though the extent of incremental lending will depend on overall demand trends in the economy.
However, the report cautioned that external headwinds could weigh on India’s growth outlook. These include rising immigration costs for H-1B visa applications in the U.S., which could impact Indian IT services, and higher U.S. tariffs on Indian goods. Such global factors, combined with macroeconomic uncertainties, may moderate credit demand in the short term.
India’s Consumer Price Index (CPI)-based inflation eased to an eight-year low of 1.54% in September, creating additional room for the RBI to focus on rate cuts and liquidity infusion to stimulate growth.
The RBI has recently revised India’s GDP growth forecast for FY2025–26 from 6.5% to 6.8%, citing the positive impact of structural reforms, including GST improvements, that could offset external challenges.
RBI Governor Sanjay Malhotra noted that India’s GDP grew 7.8% in Q1 FY2025–26, driven by robust private consumption and steady investments. On the supply side, Gross Value Added (GVA) rose 7.6%, supported by a revival in manufacturing and continued expansion in the services sector.
High-frequency indicators suggest that economic activity remains strong, Malhotra added. He further mentioned that rural demand has remained resilient due to a good monsoon and strong agricultural performance, while urban demand continues to recover gradually.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.
