Mumbai (Maharashtra) [India], August 6 (ANI): The Reserve Bank of India (RBI) Governor Sanjay Malhotra will announce the policy rates today at 10 AM in Mumbai as the three-day monetary policy committee (MPC) meeting will conclude.

The meeting, which began on August 4, was held to review the repo rates and determine the central bank's policy stance for the upcoming months.

The six-member Monetary Policy Committee is headed by the RBI Governor and comprises three officials from the central bank and three external members nominated by the Government of India.

The MPC meets every two months to decide on key interest rates and outline the direction of the country's monetary policy.

According to a report by the State Bank of India (SBI), the RBI is expected to announce a 25 basis points (bps) cut in the repo rate in the current monetary policy meeting.

The report suggested that a frontloaded rate cut in August could bring an 'early Diwali' by boosting credit growth, especially as the festive season in FY26 is also frontloaded.

The SBI report highlighted that historical data show a clear trend, any repo rate cut ahead of Diwali leads to higher credit growth during the festive period.

It stated, 'We expect RBI to continue frontloading with a 25 bps cut in August policy.'

Citing a past instance, the report mentioned that a 25 bps repo rate cut in August 2017 resulted in an incremental credit growth of Rs 1,956 billion by the end of Diwali, with nearly 30 per cent of this growth coming from personal loans.

It added that Diwali, being one of India's biggest festivals, witnesses increased consumer spending, and a low-interest rate environment ahead of the festival helps improve credit demand.

In its previous meeting held in June, the RBI had taken a surprising step by cutting the repo rate by 50 bps, bringing it down to 5.5 per cent.

Explaining the move, Governor Malhotra had said the decision was driven by softening inflation, with both near-term and medium-term projections falling within the RBI's target range. He also noted that food inflation remained under control.

The upcoming announcement is expected to provide further clarity on the central bank's approach of supporting economic growth ahead of the festive season. (ANI)