Most likely, Tolkien coined the name 'Balbo' simply to mirror the sounds of the existing name 'Bilbo', without intending it to have any specific meaning. He may have been influenced on some level by the Italian surname 'Balbo', or perhaps by the Theatre of Balbo in ancient Rome. Indeed, several Hobbit families had members with names that hint at an Italian connection (such as Largo Baggins or Basso Boffin). If it were derived from an Italian or Latin root, 'Balbo' would probably mean 'stutterer', though it seems doubtful that Tolkien meant for it to be analysed to quite that depth.

Actually, Basso was probably Balbo's future brother-in-law at the time he disappeared. Balbo was only twenty-eight years old at the time, considered very young for a Hobbit, and realistically it would be some years before he would marry Basso's sister Berylla. We don't have a specific date for their marriage, but the fact that their eldest son Mungo was born in III 2807 (or 1207 by the Shire-reckoning, twelve years after Basso's disappearance) tends to support this conclusion.