RBI Governor Sanjay Malhotra will announce policy rates today at 10 am
Mumbai (Maharashtra) [India] Mumbai (Maharashtra) [India], Aug 6 (ANI): Reserve Bank of India (RBI) Governor Sanjay Malhotra will announce policy rates at 10 am today in Mumbai. The meeting comes to an end as the three-day Monetary Policy Committee (MPC) meeting comes to an end. The meeting, which began on August 4, was held to review repo rates and set the central bank’s policy stance for the coming months. The six-member Monetary Policy Committee is headed by the RBI governor and comprises three officials of the central bank and three external members nominated by the Government of India. The MPC meets every two months to decide on key interest rates and set the direction of the country’s monetary policy.
According to a report by the State Bank of India (SBI), the RBI is likely to announce a 25 basis points (bps) cut in the repo rate in the ongoing monetary policy meeting. The report suggested that a one-time cut in rates in August could bring an “early Diwali” by boosting loan growth, especially since the festive season in FY26 is also already underway.
The SBI report highlights that historical data shows a clear trend, any cut in the repo rate before Diwali boosts loan growth during the festive period. “We expect the RBI to continue with a further 25 basis points cut in the August policy,” it said. Citing an older example, the report mentioned that a 25 basis points cut in the repo rate in August 2017 resulted in an incremental loan growth of Rs 1,956 billion by the end of Diwali, with nearly 30 per cent of the growth coming from personal loans.
It further added that Diwali, being one of India’s biggest festivals, witnesses a surge in consumer spending, and a low interest rate environment ahead of the festival helps improve credit demand. In its last meeting held in June, the RBI had made a surprise move by cutting the repo rate by 50 basis points to bring it down to 5.5 per cent. Explaining the move, Governor Malhotra had said that the decision was taken due to softening of inflation, with both near- and medium-term projections being within the RBI’s target range. He also said that food inflation remains under control. The upcoming announcement is expected to provide further clarity on the central bank’s approach to supporting economic growth ahead of the festive season.
