The RBI may cut the repo rate by 25 basis points. The general public will receive OrPaosa means another gift before Diwali.
According to an SBI study, with retail inflation expected to remain soft, it would be appropriate for the RBI to cut the repo rate by 25 basis points in the upcoming monetary policy. The Monetary Policy Committee, chaired by the RBI Governor, will announce its decision on October 1st.
If the repo rate is reduced, it will be nothing less than a big Diwali gift like orpaisa for the common people. With the new GST rates already implemented from September 22, people have received the first major relief. If the RBI cuts the repo rate, it will be the second big gift for the public before Diwali.
Repo Rate Cut: How much will it be?
According to a report by Morgan Stanley, the Reserve Bank of India (RBI) may cut the repo rate by 0.25% this time.
The report also says that due to the reduction in GST rates, inflation (CPI – Consumer Price Index) may come down.
For the financial year 2025-26, inflation could stay around 2.4% per year. That’s why the report estimates that RBI might cut the repo rate by 0.25% in October and again by 0.25% in December.
What is Repo Rate?
The country’s central bank (RBI) holds a monetary policy meeting every two months.
In this meeting, decisions about the repo rate and other financial matters are taken.
However, everyone mainly focuses on the repo rate because any change in it directly affects the common man’s pocket.
Through the repo rate, the RBI tries to control inflation. It is the rate at which commercial banks borrow money from the Reserve Bank for a short period of time.
If it happened
We assumed a 0.25% cut in the interest rate. At present, the lowest home loan interest rate is 7.35%. If reduced by 0.25%, it comes down to 7.10%.
