Winning Bizness Desk

Mumbai The Reserve Bank of India (RBI) may reduce the repo rate in October this year. According to financial experts, the cut could be around 25 basis points. If this happens, it will directly benefit common people as loans from banks could become cheaper in the coming months. A lower repo rate means banks get money from RBI at a lower interest, and in turn, pass on the benefit to customers.

October May Bring a Rate Cut

Global brokerage firm Morgan Stanley has predicted that RBI could make this cut in October. However, during the upcoming meeting in August, RBI is expected to keep the current interest rate unchanged. The possibility of a rate cut depends on inflation trends. If inflation continues to drop, there is a higher chance that RBI will reduce rates in its October policy review.

Inflation is Coming Down

According to the report, inflation has remained below 4% since February this year. In June, inflation dropped even further. This is the lowest it has been in several years. Prices of essential food items like wheat and pulses have fallen by 1.1% compared to last year. Experts credit this to good crop production, favorable weather, and government measures such as stock limits and availability of affordable vegetables.

Signs of Relief in Food Prices

The fall in food prices is a major reason behind the overall drop in inflation. Better supply of vegetables, steady production of wheat and pulses, and government efforts to manage stock and prices have helped control inflation. If this trend continues, it strengthens the case for the RBI to reduce the repo rate. However, the central bank will likely wait to see more signs of stable growth before taking action.

No Change Expected in August Policy

Another financial group, HSBC, has said that RBI may not make any changes in repo rate during its August and October meetings in 2025. At present, the repo rate stands at 5.50%. HSBC believes that while no change is expected in the short term, the repo rate could be lowered later, possibly reaching 5.25% by the end of 2025, depending on the country’s economic situation.

All Eyes on Economic Growth and Inflation

The final decision by RBI will depend on multiple factors like inflation trends, economic growth, and global conditions. RBI is expected to proceed with caution and monitor these indicators before cutting rates. For now, people looking to take loans can hope for some relief in the near future.

7 Key Points at a Glance

• RBI may cut repo rate by 25 basis points in October.
• This could make loans cheaper for customers
• Inflation has stayed below 4% since February.
• Food prices, especially wheat and pulses, have fallen.
• Rate cut depends on continued low inflation.
• HSBC expects no repo rate change in August and October.
• Repo rate may drop to 5.25% by end of 2025.