Mumbai
The three -day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has started from today. This important meeting is being chaired by RBI Governor Sanjay Malhotra. In the last three meetings, the Reserve Bank has already cut the repo rate by a total of 100 basis points, due to which the repo rate is currently at 5.50 percent. Now it will be interesting to see if the central bank will cut interest rates or keep them stable this time too. The results of the meeting will be declared on 6 August.
Possibility of cut by 25 basis points in repo rate
According to economists, the central bank has a strong reason for a reduction of at least 25 basis points in the policy interest rate. Due to the tariff of America, India’s exports can be affected and this can cause recession in overall economic activities.
According to a recent research report by the State Bank of India (SBI), the RBI can cut 25 BPS in the August meeting in view of the current global uncertainties and relatively low inflation. The report states that this step can speed up debt flow before the festive season and give new energy to the economy.
So far, it has been cut three times, will the interest decrease again?
The RBI has already cut the repo rate for three consecutive times, due to which there has been a reduction of a total of 100 basis points i.e. 1%. Currently the repo rate is at 5.50%. This is the rate on which banks take loans from RBI. Based on this, interest on loan and EMI is fixed.
Some experts believe that RBI can stop now and this time can keep the repo rate stable. He says that in June, the inflation rate i.e. retail inflation was 2.1%, which is quite low. In such a situation, RBI can take some time to see the effect of the cuttings made earlier.
Some experts are expected to cut
However, many experts are also saying that in the current situation, RBI can cut one and 25 basis points i.e. 0.25%. ICRA Chief Economist Aditi Nair says that the new tariff and global uncertainty by the US can affect GDP growth. In such a situation, RBI can make one last cut so that growth gets support.
Crisil Chief Economist Dharmakirti Joshi also believes that the danger on growth is currently larger than inflation, so RBI can cut 25 basis points.
SBI report also expected to reduce repo rate
SBI’s research report says that if RBI now cuts, then it will benefit directly in the festive season. The bank believes that the season of festivals is already coming and if the repo rate decreases, then the demand for credit growth can increase. The report warns that RBI should not delay, otherwise the right time can be spent.
Careedge Rating says that RBI has already cut the repo rate and now its effect needs to be seen for some time. He said that there will be no further cut until there is no major decline in growth.
Madan Sabnavis, Chief Economist of Bank of Baroda, says that June inflation or America’s tariff policy will no longer make any difference on the policy. RBI has already kept this data in mind. Therefore, there will be no change at the moment, but there will be vigilance in the tone.
Control of inflation, worry about oil price and tariff
The government has given a target of 4% inflation to the Reserve Bank, with 2% up and down exemption. Inflation has been 2.1% in June, which is very low in this realm. But crude oil prices and tariffs imposed by the US are still a cause of concern.
Will EMI decrease or not?
RBI’s MPC meeting is very important. Some experts hope that there will be another small cut, which can make the home loan cheaper. At the same time, some experts believe that RBI will wait at the moment. It remains to be seen which path RBI adopts on 6 August.
If you are also thinking of taking a home loan or filling EMI in advance, then keep an eye on this meeting of RBI.
Need for policy steps on time
According to the report, history is a witness that whenever the festive season comes early and the interest rates are cut before that, there is a sharp jump in credit growth (debt growth). The report also warns that the central bank should take steps at the right time, so that the policy window can be availed.
Changes in inflation forecasts possible
According to the report of Careedge Ratings, the retail inflation rate can go below 4 percent by the fourth quarter of FY 2026. Due to this, RBI can low its inflation estimate for this financial year.
GDP estimate intact, eye on external pressures
Careedge has stated that they are maintained at the forecast of 6.4 percent GDP growth rate for FY 2026, but need closely monitoring of external pressures coming from the US and other countries.
