RBI MPC Feb 2025: Anticipation for Double Relief
The middle class is eagerly awaiting further financial relief. Following the Union Budget announcement by Finance Minister Nirmala Sitharaman, which made annual income up to ₹12.75 lakh tax-free (including a ₹75,000 standard deduction), attention has now shifted to the Reserve Bank of India (RBI). The expectation is that the RBI may reduce the repo rate, easing the burden of home and car loan EMIs.
RBI MPC Meeting: Key Announcement on EMI Relief
After the major tax relief in the budget, the focus is now on the RBI’s Monetary Policy Committee (MPC) meeting scheduled for February 5-7, 2025. This meeting, the last for the financial year 2025, will be particularly significant as it will mark the first repo rate announcement under the new RBI Governor, Sanjay Malhotra. The decision regarding the repo rate will be announced on Friday, February 7, at 10 AM. Live updates will be available on financial news portals like Moneycontrol Hindi and on RBI’s official social media accounts.
Repo Rate Has Remained Unchanged for 11 Consecutive Terms
In previous monetary policies, former RBI Governor Shaktikanta Das maintained the repo rate at 6.5% for 11 consecutive times. The last change was in February 2023, when it was increased by 0.25% to 6.50%. Before that, during the COVID-19 pandemic, the rate had remained at 4% for an extended period. Now, after nearly two years, market experts predict a possible repo rate cut.
Expected Repo Rate Cut and Its Impact
Reports from BofA Securities indicate that the RBI might reduce the repo rate by 0.25% to 6.25% in February 2025. If implemented, this will be the first rate cut in two years.
How a Repo Rate Cut Benefits Borrowers
RBI is among the few central banks yet to lower the benchmark rate despite global economic shifts. If the repo rate is reduced, borrowing will become cheaper as commercial banks borrow from the central bank at this rate. Consequently, home loans, car loans, and other borrowings may see lower EMIs, easing the financial strain on consumers and boosting spending.
With this anticipated announcement, the middle class stands to benefit significantly, further complementing the recent income tax relief measures introduced in the budget.
