The RBI has cut the repo rate by 25 basis points, marking a shift toward policy easing amid signs of moderating economic activity.
Home loan borrowers are expected to see lower EMIs as banks revise lending rates linked to the repo rate and MCLR.
The move may be the start of a gradual easing cycle, with borrowing costs likely to fall across housing, consumer credit and small business loans
The Reserve Bank of India on Friday announced a 25 basis point cut in the repo rate, signalling the first policy easing in months and offering relief to borrowers amid concerns over slowing economic momentum. With the benchmark lending rate now reduced, banks are expected to transmit the benefit to consumers in the coming weeks.
EMIs Likely to Fall
The rate cut is set to bring down the cost of borrowing across the board, particularly for home loan customers. Once banks revise their marginal cost of lending rates (MCLR) and repo-linked loan rates, home loan EMIs are expected to fall, offering some relief to households facing elevated costs and tight liquidity.
Borrowers on floating-rate home loans will be the first to see reductions in monthly instalments, though the extent and speed of transmission will vary across banks.
The central bank noted that while inflation remains within the targeted band, recent data indicates moderation in demand and a softening in several economic indicators. The Monetary Policy Committee (MPC) said a calibrated rate reduction was necessary to support consumption, revive private investment and maintain financial stability.
The RBI also highlighted favourable liquidity conditions and a stable global environment that enabled the policy shift.
Banks are expected to announce revisions to their lending rates over the next few days, while deposit rates may also face downward pressure. Analysts believe the latest cut could mark the start of a modest easing cycle, depending on the inflation trajectory and global financial trends.
With borrowing costs set to decline, the housing sector, consumer credit and small businesses are expected to benefit most from the policy move.
