Repo rate cut: The Reserve Bank of India (RBI) announced a 0.25% cut in the repo rate following its Monetary Policy Committee (MPC) meeting on Friday. With this decision, the repo rate has been reduced from 5.5% to 5.25%. RBI Governor Sanjay Malhotra stated that the decision was made unanimously after a thorough study of the evolving economic situation, declining inflation, and strong GDP growth during the three-day meeting.
How much cheaper will your EMI loan be now?
The direct benefit of the reduction in repo rate is felt on the EMI of home loans, car loans and personal loans. Banks usually fix the interest rates of their loans based on the repo rate. For example, if a person has taken a home loan of Rs 30 lakh for 20 years and earlier he had to pay 9% interest, then his EMI would be Rs 26,964. Now, with the interest rate reduced by 0.25% to 8.75%, the EMI will reduce to Rs 26,611. This means there will be a direct saving of Rs 353 every month. This saving will amount to Rs 4236 in the entire year, while it can provide relief of up to Rs 84,000 in a period of 20 years.
According to the RBI, current economic conditions are quite strong. GDP growth in the second quarter of fiscal year 2025-26 was recorded at 8.2%, reflecting the strength of the Indian economy. Retail inflation fell to a record low of 0.25% in October 2025, giving the RBI ample room to cut rates. The Governor stated that with demand growing rapidly and inflation steadily declining, lowering interest rates will provide relief to people’s pockets and increase liquidity in the economy.
What is the sign ahead?
The RBI has decided to maintain its policy stance as neutral, suggesting that interest rates may remain stable in the coming months. However, experts say the possibility of further rate cuts remains open if inflation remains low.