The Reserve Bank of India, i.e., RBI has reduced the repo rate by 0.25% to 6%. Earlier it was 6.25%. That means, loans may become cheaper in the coming days. Your EMI will also decrease. RBI Governor Sanjay Malhotra informed about the decisions of the first monetary policy committee meeting of RBI in the new financial year today on 9 April at 10 am. This meeting started on 7 April.
Recent RBI Repo Rate Cuts RBI repo rate cut
Earlier, in the last meeting of the financial year 2024-25, RBI had cut interest rates by 0.25%. In the meeting held in February, interest rates were reduced from 6.5% to 6.25%. This reduction was made by the Monetary Policy Committee after about 5 years.
How Does a Repo Rate Cut Impact Loans and EMIs?
After the reduction in repo rate, banks can also reduce their interest rates on loans like housing and auto. If interest rates are reduced, housing demand will increase. More people will be able to invest in real estate. This will give a boost to the real estate sector.
The interest rate at which RBI gives loans to banks is called repo rate. Due to reduction in repo rate, banks will get loans at lower interest rates. When banks get loans at cheaper rates, they often pass on the benefit to the customers. That is, banks also reduce their interest rates.
RBI Governor Sanjay Malhotra’s Key Announcements
During the MPC meeting, RBI Governor Sanjay Malhotra outlined 8 major points, who shaped the decisions of the Central Bank:
- The committee unanimously voted to reduce the repo rate by 0.25% to 6%.
- The committee decided to change its stance from neutral to accommodative.
- Domestic growth will also be hampered due to the impact on global growth due to trade friction.
- Higher tariffs will impact exports. There are signs of improvement in manufacturing activity.
- The fall in crude prices will help keep inflation under control.
- NPCI will be given the right to decide the limit of consumer to merchant UPI transactions.
- At present, the limit for person-to-merchant payment is Rs 2 lakh.
- New guidelines will be issued regarding gold loan.
Inflation Trends and Economic Outlook in India
Due to the cheapness of pulses and vegetables, the retail inflation rate has come down to 3.61% in February. This is the lowest level of inflation in 7 months. Inflation was at 3.54% in July 2024. Inflation was 4.31% in January 2025. RBI’s inflation range is 2%-6%.
Wholesale inflation rose to 2.38% in February. Earlier, inflation was at 2.31% in January. Inflation has increased due to the increase in the manufacturing cost of food products. The Ministry of Commerce and Industry released these figures today i.e. on 17 March.
