Inflation in the country has come down, will the loan EMI be reduced again in April?

Recently, retail and wholesale inflation figures have come out. Retail inflation decreased by more than 90 basis points in the country. Due to which the retail inflation figures in the country came down to a 5-month low of 4.31 percent. 

However, after the RBI MPC meeting in the first week of February, the RBI governor had said that the country's average inflation figure in the current financial year could be 4.8 percent. 

Now the inflation figure in the country in January has come down to below the average inflation and the inflation figure is expected to come down in the months of February and March as well. 

In such a situation, interest rates may be cut again in the meeting to be held in April. Let us also tell you what kind of report has come out on this.

Repo rate may be cut in April

According to a report by Centrum Institutional Research, the recent decline in retail inflation in January may provide the Reserve Bank of India (RBI) with enough room for a 25 basis point (bps) rate cut in the near future. 

The report said that we expect inflation to average 4.8 percent in FY25. This sharp slowdown in inflation will provide enough room for the RBI to cut rates by 25 bps. 

According to the report, the decline in inflation last month was mainly due to a fall in the prices of food items, especially vegetables. As soon as fresh vegetables and pulses come into the market, inflation pressure is likely to reduce further.

Inflation figures have been better

The report suggests that this trend will help bring down overall inflation to an average of 4.8 per cent for FY25. In January, headline retail CPI declined to 4.3 per cent from 5.2 per cent in December 2024. 

A major reason for this decline was a significant drop of 237 bps in food prices. Year-on-year, food and beverage (F&B) inflation declined from 7.7 per cent in December to 5.7 per cent in January. 

The decline in vegetable prices played an important role in reducing overall inflation, as fresh produce helped ease price pressures.

Focus will also remain on rupee

The report said that with inflation concerns subsiding for the time being, the RBI will have more flexibility to focus on supporting economic growth. 

However, it also warned that the falling rupee needs to be closely monitored as it may have an impact on domestic inflation. 

The Monetary Policy Committee (MPC) has maintained a "neutral" stance in its latest meeting, indicating that future rate cuts will depend on incoming macroeconomic data. If inflation remains under control, the RBI may consider a rate cut of 25 bps to support economic activity.