Central Government’s Decision on GST Reduction
Will RBI Reduce EMI? Food and Clothing Prices Drop Due to GST
National | The Central Government has implemented a policy of reduction in GST. As a result, many essential items have become cheaper. This includes food items, clothes, and even insurance becoming more affordable. Soon, there is also a possibility of reduction in home loan EMIs (RBI Repo Rate EMI). The RBI may cut the repo rate and offer cheaper loans to customers. Hence, many people’s EMIs could further reduce. According to some reports, the RBI may reduce the repo rate by 50 basis points in the coming month. The Monetary Policy Committee meeting is scheduled for next month. It is being said that RBI has geared up to deliver a “double Diwali bonanza.”
Retail Inflation Under Control?
There is a possibility that the retail inflation rate will reduce in the coming days. Leading financial institution Morgan Stanley has estimated that the Reserve Bank of India’s repo rate may fall by up to 50 basis points. Food grain prices have already declined, and the benefits of GST reduction are being realized. As the prices of goods drop, inflationary pressure is expected to ease, according to the Stanley report. The report also claims that in the financial year 2026, the average inflation rate will remain at 2.4 percent. Therefore, RBI is likely to reduce the repo rate by 25 basis points each in October and November, totaling a 0.50 percent cut.
As per this report, retail inflation has remained below RBI’s target of 4 percent for the last seven months. One reason for this is the drop in food prices. However, core inflation still remains around 4.2 percent. In the last 22 months, core inflation has been at 3.1 percent and below 4 percent.
Break on Repo Rate Cuts
RBI started reducing the repo rate from 2025. Earlier, in February and April 2025, the repo rate was reduced by 0.25 percent each. As a result, the repo rate came down from 6.50 percent to 6 percent. Now, with another 0.50 percent reduction, the repo rate has reached 5.5 percent. However, in August, a break was applied to this rate cut policy. Now, there is a possibility of another 0.25 percent cut each in October and November.
