Monetary policy view: Should RBI cut rates now? PwC says no need to ‘waste a bullet’ as growth holds firm

Making a case for maintaining the status quo on interest rates, PwC Partner and Economic Advisory Services leader Ranen Banerjee said any rate cut at this stage would amount to “wasting a bullet” at a time when economic growth is robust and inflation remains benign.

The Reserve Bank of India is unlikely to reduce the policy rate at its next Monetary Policy Committee (MPC) meeting scheduled for February 4–6, 2026, Banerjee told PTI. The meeting, chaired by RBI Governor Sanjay Malhotra, will be the last MPC meeting of the current financial year.




“If the growth numbers are holding up and the base year revision is also on the anvil, which is expected to provide better estimates, then there is no need for a rate cut,” Banerjee said.

He argued that private capital expenditure is not particularly sensitive to interest rates and is more closely linked to demand visibility and capacity utilisation. “I do not think that the private capex is held up because of the interest rate. It is because there is an uncertainty of demand or the confidence in demand or sustainability of demand is not there and the capacity utilisation is still in the range of 70–75 per cent. Unless capacity utilisation inches close to 85 per cent, there is no immediate urgency for the private sector to put up additional capacity,” he said.

Banerjee said the MPC may opt for a prolonged pause rather than further easing. “Firing a bullet when it is not needed as we are having good growth and contained inflation. So, there is no need for a rate action at this point of time,” he added.

Last month, the six-member MPC voted unanimously to cut the repo rate by 25 basis points to 5.25 per cent while retaining a neutral stance, leaving room for future action if warranted. This marked the fourth rate cut since February 2025, even as the central bank held rates steady in the August and October policy reviews.

During calendar year 2025, the RBI cumulatively reduced the repo rate by 125 basis points from a peak of 6.5 per cent. The central bank remains mandated to keep CPI-based retail inflation at 4 per cent, with a tolerance band of 2 percentage points on either side.