RBI News: Home loan EMI will become even cheaper, RBI will soon cut the repo rate

RBI News: The Reserve Bank of India (RBI) may cut interest rates further. The central bank has already reduced the repo rate by 1 percent three times. Recently, it cut the policy rate by 50 bps. 

According to Angel One's report "Ionic Wealth", RBI may cut the repo rate again after a pause. The report says that more liquidity may be required in the second half of FY 2025-26. A reduction in the repo rate makes all types of interest rates cheaper. 

Recently, RBI has reduced the inflation forecast for FY26 to 3.7%. The forecast for the first three months is 2.9%. The average inflation in April and May has also been around this. 

The report says that RBI may reduce interest rates after some time and more liquidity will need to be injected in the second half. This means that RBI may feel that interest rates will have to be reduced further to boost the economy. 

Reduction in inflation 

Inflation based on the Consumer Price Index in the country fell to 2.82% in May 2025, from 3.16% in the previous month of April 2025. CPI is a measure that shows how expensive things are becoming for people. 

On a month-to-month basis, inflation has come down by 35 basis points. Core inflation has come down slightly to 4.28%, from 4.36% last month. Core inflation does not include food items and fuel. 

The report says that based on the current inflation figures, RBI has a good opportunity to promote economic growth. Since inflation is under control, RBI can push the economy forward by reducing interest rates. 

The report also says that domestic inflation is under control, but external factors such as geopolitical conditions and trade agreements can affect inflation. 

Prices of food items 

The report warns that there is some uncertainty about imported inflation. This means that rising prices of things coming from other countries can also increase inflation in India. 

Inflation has come down significantly due to the fall in the prices of food items. Food inflation fell to 0.99% in May, which was 1.78% in April. The price of vegetables has fallen by a massive 13.7% compared to last year. 

The price of pulses has also come down by 8.2% compared to last year. One reason for this is that the prices of these items were high last year. The pace of increase in the price of grains has also slowed down. 

The price of grains increased by 4.7% in May, while it had increased by 5.4% in April. The prices have come down due to improvement in the supply of food items. The Rabi crop has been good and the sowing of Kharif is also going well, due to which the supply has improved.