The Reserve Bank of India (RBI) could reduce policy rates once more before the year ends, according to a new report by Goldman Sachs. Recent GST simplifications and easing of domestic regulations suggest that the period of strict fiscal tightening is over, potentially supporting a gradual recovery in credit demand. “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 said, as quoted by ANI. The report added that the RBI’s recent steps should make lending conditions easier, though how much banks will actually lend depends on overall economic demand. In its previous meeting, the RBI’s Monetary Policy Committee (MPC) decided unanimously to keep the policy repo rate at 5.5%. Goldman Sachs warned that external challenges, such as higher US H-1B visa costs for Indian IT workers and 50% tariffs on Indian goods, could limit credit growth amid broader economic uncertainties.“External headwinds continue to weigh on India’s outlook, including tighter US immigration costs for H-1B visas that affect Indian IT services, in addition to elevated US tariff (50 per cent) on Indian goods; these factors could temper credit demand alongside broader macro uncertainty,” it said.Despite these headwinds, a strong monsoon and rationalised GST rates have prompted the apex bank to raise growth projections for FY26. The RBI’s monetary policy statement also indicated that while key rates remain steady, there is room for further easing to support growth, opening the door for a possible 25-basis-point cut.