There have been indications from the RBI Governor that loan EMIs will be reduced.
Recently, Federal Reserve Chairman Jerome Powell had hinted at cutting interest rates. Now the RBI Governor has also given similar indications. This means that in the monetary policy meeting to be held in the month of December, loan EMIs of common people may be seen decreasing. After keeping interest rates on hold for the second consecutive time in October, the RBI Governor had kept his stance neutral. By the way, RBI has already reduced the rate by one percent in the current year. A cut of 25 basis points was expected in the policy meeting of October. But this did not happen. Even after that, RBI had increased the estimates of reduction in inflation and growth figures of the economy.
Now the biggest question is that after holding the interest rates for two consecutive times, how much can RBI cut the interest rates? Experts believe that after cutting the rate by 25 basis points in December, RBI will keep the window open for another cut in the February meeting. This means that there may be a decrease of another 50 basis points in the current financial year. Let us also tell you what kind of signals have been given by RBI Governor Sanjay Malhotra regarding reduction in interest rates…
5 members voted to hold the policy rate
In the meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), Governor Sanjay Malhotra indicated that there is scope for further reduction in interest rates and indicated that it will be done at the appropriate time to have the desired effect. RBI released the details of the MPC meeting held on October 1 on Wednesday. In this meeting, the Governor along with five other MPC members voted in favor of keeping the repo rate stable at 5.50 percent. In this meeting, Malhotra had said that the favorable outlook for gross and core inflation as a result of the revision in forecasts opens up policy space to further support growth.
Why was there no change in October?
Malhotra said that although there is still scope for further reduction in the policy rate, I feel this is not the appropriate time for it, as it will not have the desired effect. He said that therefore, I vote in favor of keeping the repo rate unchanged at 5.50 percent. However, the policy objective is to continue to facilitate conditions that promote growth. In this meeting, MPC member and RBI Deputy Governor Poonam Gupta said that the combination of growth and inflation has created scope for further reducing the policy rates.
Next meeting will be held in December
The next meeting of the MPC to decide monetary policy is proposed between December 3 to 5, 2025. The Reserve Bank had overall reduced the repo rate by one percent in the three MPC meetings held between February and June. However, after that in the meetings held in August and October it was kept constant at 5.50 percent. Earlier, RBI MPC had reduced the rate by 25 basis points in the policy meetings of February and April. After that, in the June policy meeting, a mega cut of 50 basis points was made. After which the total reduction in the current year was 100 basis points i.e. one percent.