Inflation Feb2025 / SBI's biggest prediction, loan EMI will be 0.75% less in 7 months

Inflation fell below RBI's tolerance level in February 2025, which has increased the possibility of a rate cut in April. According to the SBI report, a reduction of up to 0.75% is possible by October, which may make loan EMIs cheaper. The industry sector also remains strong.

Inflation Feb2025: Recently, the inflation rate figures for February 2025 have come out, indicating that the possibility of a cut in interest rates in the monetary policy of RBI (Reserve Bank of India) has increased. Inflation has reached below the tolerance level of RBI, which is expected that RBI may cut interest rates in April 2025.

Possible policy and interest rate changes of RBI

According to the report of the country's largest bank SBI, a total of 75 basis points (0.75%) may be cut in the four monetary policy committees (MPC) meetings to be held between April and October 2025. If this happens, then the RBI's repo rate may come down by one percent to 5.50% in the year 2025.

In February 2025, RBI had already cut 25 basis points, and if there is a further cut of 75 basis points, then there will be a decline of 1% overall. This is likely to provide relief to the general public on loans and EMIs.

Reasons for fall in inflation rate

According to SBI Research Ecowrap, Consumer Price Index (CPI) based inflation may come down to 3.9% in the fourth quarter of FY 2024-25, while it is expected to average 4.7% for the entire financial year.

The major reasons for the fall in inflation rate are as follows:

Fall in food prices - Retail inflation was recorded at 3.6% in February 2025, which is a seven-month low. The main reason for this is a sharp fall in the prices of vegetables and food items.

Significant reduction in the prices of garlic, potatoes and tomatoes - For the first time in the last 20 months, vegetable inflation was recorded negative. Consumption of garlic decreased during the Maha Kumbh festival, which led to a fall in its prices.

Strength in industrial production - The Index of Industrial Production (IIP) grew by 5% in January 2025, while it was 3.2% in December 2024.

Corporate sector strength - India's nearly 4,000 listed companies reported revenue growth of 6.2% in the third quarter of FY 2024-25, while EBITDA grew 11% and net profit (PAT) 12%.

Imported inflation a challenge

Although domestic inflation has declined, imported inflation has seen a rise. It rose from 1.3% in June 2024 to 31.1% in February 2025. This increase is due to high prices of precious metals, petroleum products and chemicals. In addition, the fall in the Indian rupee may affect inflation in the coming months.

Economic outlook and prospects

Economists believe that interest rate cuts are more likely in April and June 2025. After this, another round of interest rate cuts after August 2025 may start from October 2025.

If inflation remains under control and industrial production and corporate sectors remain strong, it could be a positive sign for the Indian economy. This will benefit investors and consumers and maintain stability in the market.

Conclusion: The fall in inflation in February 2025 has given RBI an opportunity to cut interest rates. If RBI cuts interest rates in April 2025, it will provide relief in loans and EMIs, which will boost economic activity. However, it will also be important to keep in mind global economic factors and imported inflation.