Home Loan: The Reserve Bank of India (RBI) is preparing to cut interest rates once again. This news will bring great relief to crores of people who have taken loans. This year RBI has already reduced the repo rate twice – 25 basis points in February and again 25 basis points in April. Due to this, the repo rate which was 6.5% at the beginning of the year has now come down to 6%. If the central bank cuts it by 25 basis points once again in June, it will come down to 5.75%, which can reduce your EMI even further.
0.25% repo rate expected to decrease
The important meeting of the Monetary Policy Committee (MPC) of RBI is going to start on June 4. After this meeting to be held on June 4 and 5, the central bank will announce its decisions on June 6. RBI Governor Sanjay Malhotra will give information about the decisions of MPC on June 6 at 10 am.
According to a media report on RBI’s monetary policy among economists and treasury heads of banks, a large number of experts believe that RBI may announce a cut of 0.25% i.e. 25 basis points in the repo rate on June 6. This cut will directly affect the interest rates of your loan, which will reduce the burden of EMI.
Economic growth will gain momentum
Economists believe that inflation has remained below RBI’s target of 4% for the last three consecutive months. This has allowed the central bank to reduce interest rates. Apart from this, the focus of the central bank has now also increased on accelerating economic growth.
With a 25 basis point cut in the repo rate in April, RBI also changed its monetary policy stance. It was changed from ‘Neutral’ to ‘Accommodative’. This means that now the central bank is ready to liberalize its monetary policy. In an accommodative monetary policy, RBI increases the supply of money in the market and reduces interest rates, thereby boosting economic activity and encouraging investment.
Direct impact on EMI of home and other loans
Experts say that on May 24, RBI announced a bumper dividend of ₹ 2.69 lakh crore for the government. According to economists, this will make it much easier for the government to achieve the fiscal deficit target of 4.4%. Treasury heads of banks believe that in the coming days, RBI may take measures to increase liquidity in the market.
Due to all these factors, customers of home loans and other loans will get the direct benefit of a reduction in rates. Due to low interest rates, your monthly installment (EMI) will decrease, which will reduce the burden on your monthly budget. This can prove to be a huge saving for you, which you can use to fulfill other financial goals.