What’s inside:
This article shares updates about the repo rate and inflation trends in India, focusing on the potential for rate cuts and current economic conditions.
As inflation continues to rise, the chances of a repo rate cut in October are looking slim. The Reserve Bank of India (RBI) is cautious about lowering interest rates during this time.
Reports indicate that even if economic growth follows expected patterns in the first half of the year, interest rate reductions might not occur even in December. The RBI is likely to stay careful until inflation for essential goods drops significantly.
Currently, 26 out of 35 states and union territories have inflation rates below 4%, which is a good sign. However, high food prices in states like Punjab, Haryana, Rajasthan, and Gujarat remain a concern. Heavy rains could further affect crop production and push food prices up.
Overall inflation is expected to stay between 5.25% and 5.50% for the rest of 2025. Both rural and urban areas are seeing price hikes, with urban centers experiencing a slightly higher increase.
The RBI is likely to prioritize financial stability over rate cuts in the near future, focusing on controlling inflation before making any changes to interest rates.
Summary:
- Repo rate cut in October is unlikely due to rising inflation.
- Interest rates may not change even in December.
- 26 states report inflation below 4%, but food prices are high.
- Excessive rainfall may disrupt food supply and raise costs.
- RBI focuses on financial stability over short-term growth.
