As a major relief for the borrowers, the Reserve Bank of India has cut the repo rate by 25 bps. The cut was announced in its bi-monthly monetary policy today. The Monetary Policy Committee finished its three-day meeting that started on Wednesday, and the repo rate decision was announced today. RBI Governor Sanjay Malhotra and the other committee members unanimously decided to reduce the repo rate by 0.25%, lowering it to 5.25%.
The MPC convened its policy meeting against the backdrop of robust economic growth, historically low inflation, and the Indian rupee hovering near record low levels of near 90 per US dollar.
Home Loan EMIs to Drop
This decision is expected to reduce EMIs on home loans and other loans, easing the financial burden on individuals. The repo rate cut will also have a positive impact on the economy, as cheaper loans will increase demand and boost economic activity.
The Indian economy is facing a “rare goldilocks” period, RBI Governor Sanjay Malhotra said in a video address.
Repo rate slashes announced this year
This year, the RBI reduced the repo rate by a total of 125 basis points across four meetings, starting in February. In the October policy review, the MPC left the repo rate unchanged at 5.50% and kept its stance ‘Neutral’. The RBI also revised India’s FY26 GDP growth forecast upward to 6.8% from 6.5%, and lowered the FY26 CPI inflation estimate to 2.6% from 3.1%.
