Reserve Bank Of India / Loan will be available at lower interest rate, EMI will be cheaper, RBI will announce

Reserve Bank Of India: The 54th meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) begins on April 7, and its decisions will be announced on April 9. Considering the current economic indicators, global scenario and domestic demand, experts believe that the RBI may once again cut the repo rate by 0.25 percent. If this happens, it will be the second cut this year after February, bringing the repo rate to 6.0 percent.

Easy inflation: Basis for policy cut

Retail inflation fell to a seven-month low of 3.61 per cent in February, mainly due to softening of food prices. This figure was 4.26 percent in January and 5.09 percent in February 2024. This decline has provided a strong basis for the RBI to cut interest rates. The central bank had reduced the repo rate by 0.25 percent to 6.25 percent in February—the first cut since May 2020.

Global instability and domestic pressure

US President Donald Trump's announcement of imposing tariffs on 60 countries has affected global trade. For India, this situation is both challenging and full of opportunities, as many of its competitors are now facing higher tariffs. At such a time, it has become necessary to encourage domestic consumption and investment, and this is why the pressure on the RBI to cut rates has increased.

Key voices involved in policy making

The MPC, headed by RBI Governor Sanjay Malhotra, has six members—three from the RBI and three appointed by the government. Bank of Baroda Chief Economist Madan Sabnavis believes that in view of global developments, the MPC will have to think beyond traditional analysis. He believes that due to stability of liquidity and inflation being under control, a cut of 0.25 per cent is quite likely.

Mixed views of industry organizations

Rating agency ICRA also expects a cut in the repo rate, while industry body Assocham has a slightly cautious view. Assocham President Sanjay Nayar suggests that the central bank should adopt a "wait and watch" policy for now, so that the impact of the liquidity measures already implemented can be seen.

Real estate and investors' hopes

Signature Global Chairman Pradeep Aggarwal has described the repo rate cut as a catalyst for the housing sector. According to him, cheaper interest rates will encourage borrowing, which will increase demand in real estate. However, he also underlined that its impact will depend on how quickly and effectively commercial banks communicate the RBI's decision to customers.