Rate Cut: Your EMI may decrease next week, how much relief will you get

News Topical, Digital Desk : The stock market saw a record rally today. However, it also declined afterward. However, the market may receive further positive news next week, which will provide support for stocks in the hope of increased demand. According to a Reuters poll of economists and market experts, most experts believe that the Reserve Bank of India (RBI) may announce a rate cut in next week's policy review. In fact, experts believe that the Reserve Bank currently has all the necessary conditions for a rate cut. This includes the need for steps to boost demand amid current tariff pressures and ample room for rate cuts due to softening inflation.

What's the forecast?

According to a Reuters survey, the Reserve Bank of India is expected to reduce its key interest rate by 25 basis points to 5.25% on December 5th. Most economists believe this rate could remain at this level until 2026. This means that another rate cut is unlikely for a long time after the December cut. Sixty-two of the 80 economists surveyed in the Reuters poll, conducted between November 18-26, predicted that the RBI would raise the repo rate to 5.25% at the end of its monetary policy review meeting on December 3-5, while the remaining 18 expected no change. Most experts believe rates will remain at this level until the end of next year. Kaushik Das, India Chief Economist at Deutsche Bank, said that if the RBI further reduces its 2025-26 inflation forecast from the current 2.6% in the December policy, the likelihood of a 25 basis point rate cut will be stronger. Despite these projections, a separate Reuters survey estimated India's GDP growth at 7.3% in the July-September quarter.

What are the risks? Experts believe that the 50% tariff on US imports remains in effect, making private investors cautious, and foreign investors have withdrawn approximately $17 billion from the Indian stock market this year. According to Madhavamkutty, Chief Economist at Canara Bank, there is no clarity on the trade deal... if it doesn't move forward, the likelihood of another rate cut increases. He estimated that rates will remain at 5.25% until the first half of next year. According to the poll, India's economic growth is expected to average 6.8% this fiscal year and 6.5% next year. Inflation could average 2.2% and 4.0%.

Why are the cuts anticipated? According to experts, India's inflation rate fell to a historic low of 0.25% in October. A sharp decline in food prices and tax concessions on consumer products played a major role in this. Lower inflation has given the RBI the opportunity to support weak consumption by reducing interest rates, even as the rupee remains under pressure. Meanwhile, RBI Governor Sanjay Malhotra recently stated that recent economic data shows there is still room for a rate cut. The RBI has not changed rates since August, having previously cut rates by a total of 100 basis points in the first half of the year.