look news india
The Central Bank of India, Reserve Bank of India (RBI) is expected to further cut its major policy rates, especially the repo rate in the coming months. If this happens, the borrowers will directly benefit from the decrease in the monthly installments (EMIS) of various types of loans including home, auto and personal loans. The main reason behind this possible cut is the increasing economy and inflation rate gradually decrease.
According to a report by Bank of Baroda, during 2024-25, inflation is expected to decrease and increase at a constant stable pace of the economy. Both these factors will give RBI a chance to relax their monetary policy. However, interest rates are less likely to cut interest rates by the first quarter (April-June) of this year. But starting from the second quarter of the year (July-September) to the end of the current financial year (March 2025), it is expected to be cut twice, which can be of 25 basis points (0.25%) each time.
Expressing a similar opinion, BOFA Securities said in its recent report that the first rate cut is likely to be cut in the July-September quarter and the second October-December quarter. However, any delay in cutting interest rates by the US Federal Reserve (US FED) can also put pressure on the Reserve Bank of India and the rate of rate cuts may slow down. In addition, geopolitical risks and unexpected bounce in global commodity prices can also affect RBI’s decision.
At present, the repo rate remains at 6.5%. The RBI has not made any changes in the rates in the last six consecutive monetary policy meetings, causing the atmosphere of stagnation in the rates. The central bank is mainly focusing on controlling inflation and is trying to bring it to its 4% target level. It is expected that except for food inflation, there will be softening in the rest of the inflation pressures, which will encourage RBI to cut rates. If this estimate is proved correct, millions of Indian borrowers will be able to get relief from the financial burden.