India News : The Reserve Bank of India (RBI), in its Monetary Policy Committee (MPC) meeting chaired by Governor Sanjay Malhotra, announced a 25 basis points cut in the repo rate on Friday. With this, the repo rate has been revised down to 5.25%. This marks the third consecutive MPC meeting where the RBI has maintained a cautious stance, leaving borrowers without any additional reduction in EMI.
Governor Malhotra said the nation is currently going through a “Goldilocks period” — a phase where inflation is falling while economic growth remains strong. India’s retail inflation has dropped to 2.2%, one of the lowest levels in recent times, and the economy continues to grow at a robust 8%.
According to the Governor, economic activities have strengthened over recent months, and the banking system has become more resilient. To ensure greater financial stability, RBI has introduced several regulatory reforms aimed at improving consumer protection and easing business operations.
Two Major Liquidity Measures Announced
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₹1 lakh crore OMO (Open Market Operation) purchase of government bonds
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A 3-year dollar–rupee swap worth USD 5 billion
These measures are aimed at boosting liquidity and strengthening the financial ecosystem.
Inflation Trend Shows Strong Relief
Malhotra noted that headline inflation has declined significantly and is expected to hover around 4% in the coming months. Core inflation is also stabilizing, helped by the cooling of food prices.
Impact on Home Loans
A home loan of ₹50 lakh for 20 years at an interest rate of 8.25%:
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EMI remains ₹42,603
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Total interest: ₹52,24,788
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Total repayment: ₹1,02,24,788
Since the repo rate change did not alter the lending rate, EMIs will neither increase nor decrease.
Impact on Auto Loans
A ₹10 lakh car loan for 5 years at 9% interest:
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EMI: ₹20,758
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Total interest: ₹2,45,501
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Total repayment: ₹12,45,501
With no change in rates, no impact on EMIs.
