New Delhi [India], October 19 (ANI): Goldman Sachs has indicated that an additional policy rate cut is likely before the end of 2025, alongside the impact of recent GST simplifications, suggesting that India has passed the peak of fiscal consolidation. These developments, coupled with domestic regulatory easing, are expected to gradually boost credit demand across the economy.
“We expect an additional policy rate cut before year-end, and the recent GST simplification signals that peak fiscal consolidation is behind us. We expect this, along with domestic regulatory easing, to foster a gradual recovery in credit demand,” the report stated. It added that while the RBI’s recent measures should ease supply-side credit conditions, the pace of incremental lending will depend on broader economic demand dynamics.
The Reserve Bank of India’s Monetary Policy Committee (MPC) had previously kept the policy repo rate unchanged at 5.5 per cent in its last meeting. Goldman Sachs noted that external headwinds—including tighter US immigration rules for H-1B visas affecting Indian IT services and a 50 per cent US tariff on certain Indian goods—could temper credit demand amid macroeconomic uncertainty.
However, favorable monsoon conditions and GST rate rationalisation have prompted the central bank to revise growth projections for FY26 upwards. The RBI’s policy statement also indicated the possibility of another 25 basis points (bps) rate cut, while maintaining a neutral stance on key policy rates. According to the statement, current macroeconomic conditions provide room for further easing to support economic growth. (ANI)
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