New Delhi, Sept. 29 -- The monetary policy committee (MPC) is set to announce its policy decision on 1 October. While the expected sub-3% inflation for fiscal year 2026 (FY26) would typically have implied space for another rate cut, a status quo may be more opportune in light of the developments since the committee's last meeting in August.

Inflation has remained benign over the last two months. Headline consumer price index (CPI) inflation had cooled to 1.6% in July from 2.1% in June, falling below the lower bound of the MPC's target range of 4%+/-2% for the first time in eight years. It rebounded to 2.1% in August, while remaining subdued. The September reading is expected to dip to around 1.8%, taking the average for Q2 to 1.8% as wel...