RBI Repo Rate Cut: This could be great news for everyone, especially those looking to take out a new loan or who are currently paying EMIs on home, car, or personal loans. The RBI might announce another repo rate cut by the end of this year, which could lead to even lower EMIs. RBI Governor Sanjay Malhotra has pointed out that the current economic indicators show there’s room for a repo rate cut.
Big signal before MPC meeting
He mentioned that a final decision will be made during the RBI’s Monetary Policy Committee (MPC) meeting. His comments come just ahead of the MPC’s scheduled meeting from December 3 to 5. Malhotra noted that the October meeting hinted at the possibility of further rate cuts, so the upcoming meeting could bring some important news. It’s interesting to note that the MPC reduced rates by about 100 basis points between February and June, while the repo rate remained steady at 5.5 percent in both August and October.
Environment conducive to rate cuts
Experts are predicting a rate cut of up to 25 basis points in December. The main reason for this potential decrease is the Consumer Price Index (CPI) inflation dropping to a record low of 0.25 percent in October, down from 1.44 percent in September. When it comes to a significant repo rate cut, the Governor mentioned that the central bank’s main goal is price stability, with supporting growth as a secondary aim. Thus, the bank will avoid taking an overly aggressive or purely defensive approach.
When asked about the rupee’s ongoing decline, Sanjay Malhotra explained that historically, the rupee has depreciated by about three to three and a half percent each year. He added that the RBI aims to keep the rupee’s fluctuations as smooth and controlled as possible to prevent sudden or sharp changes in the exchange rate from causing economic instability.