Kolkata: Will the Reserve Bank of India. or RBI, announce the decision to trim the country’s key policy rate, popularly referred to as the Repo Rate, today? That’s a question not only India Inc, but also the common man is looking forward to eagerly. Setting aside the jargon, it can be said that if the Repo rate is cut it will help bring down the interest rates on virtually all loans that banks and, in turn, NBFCs charge their customers. It will also bring down the EMIs that you are already paying on your personal loan, home loan, car loan and all other loans, since the interest rate of all loans are linked to this policy rate set by the RBI.
It is widely expected that RBI’s rate setting committee — a six-membered Monetary Policy Committee — will take the call and cut the rate by 25 basis points, or 0.25 percentage point. If that is indeed the case, the Repo Rate will come down from 6.5%, where it has been since XXX 6.25%. Expert agencies are not only hopeful about today’s announcement, but also looking forward to a 75 basis point cut this year.
When can EMIs come down
Officials of major private banks have told News9Live that after the RBI announces it decision, every bank will take its own decision, based on a few parameters of business — when and whether to cut its own interest rates. Different banks can take different times, but there is a one-month ballpark figure to transmit the benefit to customers. Therefore, one can expect different banks to announce their respective decisions in March. So one can expect the benefits to trickle down to them in a few weeks. Those who are waiting to take new loans can perhaps wait for a few to watch how things shape up.
“We expect a 25-basis point rate cut in Feb 25 policy. Cumulative rate cut over the cycle could be at least 75 basis points, with two successive rate cuts over February and April 2025. With an intervening gap in June 2025, the second round of rate cuts could start from October 2025,” a State Bank of India Research Report has written.
Can a rate cut boost the stock market?
A rate cut is one of the factors that can certainly lift the mood among the investors. The logic is simple: a rate cut can help the common people in terms of lower EMI burdens, and therefore, nudge them to take loans to buy goods and services. This can, at an aggregate level, boost consumption in the country. Private consumption comprises 60% of the GDP of India, and it was to boost private consumption that propelled FM Nirmala Sitharaman to announce significant income tax relief in Union Budget 2025. Rising consumption will mean more business and profits for the corporate sector, and thus can impact the stock market positively. So, watch out Sensex and Nifty too today.
A cut in key policy rate (Repo Rate) will help cut down EMIs on home loans, personal loans, car loans and virtually all loans, and will also boost consumption. It can also boost the depressed stock market sentiments. Will a rate cut be announced today by RBI? Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
