The amount of loan EMI is dependent on various subjects like the market situation. Now, in a significant development, the Repo rate movement has indicated about about a probable low EMI on loans.
Another interest rate cut is expected before the end of this year, according to a recent report from Goldman Sachs. According to the report, this move, combined with recent GST (Goods and Services Tax) reforms and regulatory easing, could boost loan demand. It is expected that India will soon end its monetary tightening. A reduction in policy rates will directly benefit consumers, reducing loan EMIs. Goldman Sachs said it expects another policy rate cut, the repo rate, before the end of the year. It also noted that the recent simplification of the GST signaled that the peak of fiscal consolidation had passed.
The report further stated…
The firm believes this, combined with domestic regulatory easing, will lead to a gradual improvement in credit demand.The Goldman Sachs report stated that external factors are weighing on India’s economic outlook. These include increased immigration costs in the US for H-1B visas, which impact Indian IT services. Furthermore, the high 50% tariff imposed by the US on Indian goods could also dampen credit demand. Macroeconomic uncertainty may also contribute to this.
However, aided by a favorable monsoon and a reduction in GST rates, the central bank has revised its growth forecast upwards for fiscal year 2025-26.
Rate cut of 25 basis?
The RBI’s policy statement indicated that current macroeconomic conditions provide room for further easing. This suggests the possibility of another rate cut of 25 basis points (0.25%), while keeping key rates unchanged for now. The RBI’s Monetary Policy Committee (MPC) in its recent review had unanimously decided to keep the repo rate unchanged at 5.5 per cent.