The Reserve Bank of India (RBI) is expected to make another decision soon to provide relief to ordinary borrowers, with a strong possibility of a third consecutive repo rate cut. With retail inflation averaging below the 4% target for three months, the RBI is anticipated to reduce the rate by 0.25%.

This move could bring relief to equated monthly installments (EMIs) on home, car, and personal loans.

Key RBI Policy Committee Meeting

The RBI’s Monetary Policy Committee (MPC) will convene from June 4 for its next bi-monthly policy review, with the final decision to be announced on June 6. According to economists, the RBI has room to cut rates given slower growth and controlled inflation.

Decisions in Recent Months

In April, the RBI cut the repo rate by 25 basis points (0.25%) to 6%. This followed a 0.25% reduction in February. Thus, a total of 0.50% has been cut so far in 2025, and with the upcoming decision, the total could reach 0.75%.

Inflation and GDP Both Under Control

Considering economic developments, India’s GDP growth rate is currently estimated at 6.5% for FY25. In contrast, GDP growth in the March quarter was 7.4%, exceeding expectations. Meanwhile, with retail inflation close to the RBI’s 4% target, there is a higher likelihood of further monetary policy easing.

What Experts Are Saying

A. Prasanna of ICICI Securities stated, “Strong GDP growth in the January-March quarter provides a good basis for rate cuts. The RBI has already increased financial liquidity, so there is potential for further easing.”

Aditi Nayar, Chief Economist at ICRA, commented, “With inflation likely to remain below 4%, the MPC can reduce interest rates. A 0.25% cut in June is probable.”

RBI’s Stance Change

In April, the RBI’s MPC shifted from its ‘neutral’ stance to an ‘accommodative’ policy. As a result, the market expects further interest rate cuts in the future.

What Changes for the Common Person?

• Reduced EMIs on home and personal loans
• Improved interest rates for new borrowers
• Financial ease for industries and startups

The RBI is likely to cut the repo rate again in the coming days, which will make bank loans cheaper and bring significant relief to ordinary borrowers. Until the RBI’s final decision is clear on June 6, both the market and consumers remain focused on this important meeting.