RBI May Cut Repo Rate Again: SBI Research Suggests Loans Could Become Cheaper

Home, car, and personal loans may soon become more affordable as the Reserve Bank of India (RBI) is reportedly considering another cut in the repo rate. According to a research report by the State Bank of India (SBI), a reduction of 25 basis points could be the most “appropriate option” for the central bank in its upcoming monetary policy review.

If implemented, this move will directly benefit borrowers by reducing interest rates on retail loans. However, experts remain divided on whether the RBI will opt for a rate cut this time or maintain the current stance given the uncertain global economic environment.

RBI Policy Meet Begins Amid Global Headwinds

The RBI’s Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, will begin its three-day meeting on Monday, September 29, with the policy outcome scheduled for October 1.

The meeting comes at a time when geopolitical tensions are rising globally, and the United States has imposed a 50% tariff on Indian exports. These external pressures may influence RBI’s decision on whether to ease monetary policy further or hold rates steady.

Previous Rate Cuts in 2025

Between February and August 2025, the RBI reduced the repo rate in three phases by a total of 100 basis points. These cuts were aimed at easing retail inflation (CPI), which provided significant relief to households.

However, in its August meeting, the MPC left rates unchanged, citing the impact of global trade tensions and external uncertainties.

Why SBI Expects Another Cut

According to SBI Research, there is enough room for the RBI to go for another 25 basis point cut, largely because inflation is expected to remain under control in the coming financial year.

The report highlights that retail inflation has remained below the RBI’s comfort zone, while core inflation continues to be subdued. This, coupled with GST reforms, could create a favorable environment for monetary easing.

Expert Opinions on Rate Outlook

Economists have mixed views about the possibility of a rate cut in October.

• Dharmakirti Joshi, Chief Economist, Crisil Ltd.:
  He believes a repo rate cut is possible in October as inflation is lower than expected. With core inflation at historically low levels and GST reforms likely to reduce prices further, the RBI may have some flexibility. Additionally, the U.S. Federal Reserve recently reduced rates by 25 basis points, which could influence RBI’s stance.

• Madan Sabnavis, Chief Economist, Bank of Baroda:
  He expects rates to remain unchanged, arguing that inflation is already below the RBI’s 4% target and economic growth remains strong at over 6.5%. According to him, there may be little reason for immediate rate cuts unless the government announces an export package to counter the impact of U.S. tariffs.

• Aditi Nayar, Chief Economist, ICRA:
  She notes that recent GST reforms introducing a simplified two-slab structure (5% and 18%) could lower CPI inflation by 25–50 basis points in the short term. However, she also expects inflation to rise gradually after November, making it more likely that the RBI will hold rates steady for now.

Impact of a Possible Rate Cut

If the RBI decides to reduce the repo rate in October, it would make home loans, auto loans, and personal loans cheaper, directly lowering the EMI burden for borrowers.

The RBI’s latest bulletin confirms that the rate cuts from February to August 2025 had a strong impact on both lending and deposit rates. Another cut could boost consumption and investment at a time when India faces external challenges like weaker exports and currency depreciation.

Final Outlook

While a 25 basis point cut seems possible, much will depend on how the RBI balances domestic inflation control with global uncertainties, including U.S. tariffs and currency volatility. Borrowers can hope for cheaper loans, but the central bank’s final decision on October 1 will reveal whether relief is coming soon.