This time there is no hope of change in repo rate: RBI can retain at 5.50%, Governor will announce new rates at 10 am.

Governor Sanjay Malhotra will announce the decisions of the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) at 10 am today. The MPC meeting started from 29 September. Like the previous meeting, this time the repo rate is not expected to change.

It can be kept at 5.5%. That is, loans will not be expensive and your EMI will not increase. The RBI last reduced the interest rate of 0.50% to 5.50% in June.

The rate at which the Reserve Bank of India i.e. RBI gives loan to banks is called repo rate. Due to its decrease or increasing, loans like car or home are cheap or expensive.

Repo rate reduced by 3 times this year, 1% cut

The RBI had reduced the interest rates from 6.5% to 6.25% at the meeting held in February. This deduction was done by the Monetary Policy Committee after about 5 years.

The interest rate was reduced by 0.25% in the meeting held in April for the second time. For the third time in June, the rates were reduced by 0.50%. That is, the Monetary Policy Committee reduced interest rates by 1% at three times.

Why does the Reserve Bank increase and reduce the repo rate?

Any Central Bank has a powerful tool to fight inflation as a policy rate. When inflation is very high, the Central Bank tries to reduce money flow in the economy by increasing the policy rate.

If the policy rate is high, then the loan from the Central Bank to the banks will be expensive. In return, banks make loans expensive for their customers. This reduces money flow in the economy. If the money flow is low, there is a decrease in demand and inflation decreases.

Similarly, when the economy goes through a bad phase, there is a need to increase money flow for recovery. In such a situation, the Central Bank reduces the policy rate. This makes banks cheaper from central bank and customers also get loans at a cheaper rate.

RBI meets every two months

The Monetary Policy Committee consists of 6 members. Of these, 3 are of RBI, while the rest are appointed by the central government. The RBI meeting takes place every two months.

Recently, the Reserve Bank had issued a schedule for the meetings of the Monetary Policy Committee of FY 2025-26. There will be a total of 6 meetings in this financial year. The first meeting was held on 7-9 April.