reserve Bank of India
The Reserve Bank of India has cut up to 1 percent in four times since February 2025, which has directly benefited the common borrowers, because the banks have directly benefited from this by making the debt to their customer. Now once again a meeting of Monitoring Polis is going to be held in August, which is expected that RBI can once again cut the repo rate.
According to the State Bank of India (SBI) report, the Reserve Bank of India (RBI) can cut the repo rate of 25 basis points (BPS) in its upcoming monetary policy committee (MPC) meeting. The meeting is to be held between August 4 to 6. The report states that if the RBI once again cut the repo rate in August, it will be like Early Diwali, because it will increase the demand for debt, especially when the festive season is going to start in FY 2025-26. The report also stated that the previous figures clearly show that the repo rate cut before Diwali leads to more debt growth during the festival. The report said, we hope that the RBI will do the same further with the cut of 25 BPS in August policy.
Giving an example, the report stated that in August 2017, when the repo rate of 25 BPS was cut, till Diwali there was an additional loan of Rs 1,956 billion, out of which about 30% were personal loans. The report said that Diwali is the biggest festival in India, in which consumer expenses are high and cheap interest rates before Diwali help to increase the demand for debt.
It was also added in the report, statistics show that whenever festivals come quickly and the rate is cut before them, the growth of debt increases rapidly. It was also said in the report that for the last several months inflation is within the scope of the RBI target. In such a situation, if the RBI continues a strict monetary policy, it can cause damage in production, which will be difficult to compensate.
According to the report, monetary policy is late and if the RBI avoids the rate cut further, then waiting for inflation to decrease or grow further grows can cause great harm to the economy. The report said, "If RBI keeps waiting, it will benefit less, while no steps may have to be paid in the form of loss in production and weak investment environment."
Due to deduction from repo rate, the aim of the central bank is to control inflation and balance development. Citing the Standard Quadritic Los function, the report warned that if the RBI does not yet assume that inflation is temporary, then it can be a big mistake. In reality, inflation may be less and the decline in production may increase. The report said that the uncertainty related to tariffs, GDP growth, CPI figures for FY27 and FY26 festival season have already come in the schedule.
