This news could bring some relief to the general public. The RBI, which has been softening its monetary policies to boost economic growth, is expected to reduce the repo rate by 0.50 percent between June and Diwali.
Reports say that the RBI’s next policy review meeting is scheduled from June 4 to June 6. In this meeting, the Monetary Policy Committee may make an important decision that could be good news for the people.
It is reported that there is already a possibility of a 0.25 percent rate cut before the RBI committee meets.
Another rate cut might happen during the meeting planned for the first week of August or the last week of September.
Since Diwali is on October 20 this year, the RBI may offer a festive gift to the public in the form of another rate cut.
RBI’s Diwali Gift
The RBI had lowered the repo rate by 25 basis points in February. Another 25 basis point cut was made after the April meeting, which gave significant relief to people.
Earlier, SBI had mentioned in its report that the RBI might cut the repo rate by up to 125 basis points in the financial year 2025–26.
According to SBI’s report released earlier this month, the RBI may reduce rates by around 75 basis points during the June and August meetings.
A further cut of 50 basis points may happen in the second half of the financial year 2026.
What is the Repo Rate?
The RBI holds a policy review every two months. The Monetary Policy Committee has six members—three from the RBI
and three appointed by the central government. There are six meetings in a financial year.
During these meetings, the repo rate is set after assessing market conditions to manage inflation and support the economy.
The repo rate is the interest rate at which the RBI lends money to banks. When this rate goes down, banks can borrow money at lower costs.
This benefits the public because it makes bank loans cheaper. As a result, EMIs on loans go down, reducing the cost of home and car loans.
