RBI MPC Meeting: This is the third consecutive cut in the repo rate by the RBI in the last six months. Earlier, the rate was cut by 25 basis points in February this year and then again by 25 basis points in April.
Repo Rate Cut: This is a big relief news for the people who take loan or pay EMI on loan. Reserve Bank of India has cut the repo rate on Friday more than the market expectation. After the two-day meeting of the Monetary Policy Committee (MPC) of RBI which started on June 4, Governor Sanjay Malhotra announced a big cut of 50 basis points i.e. 0.50 percent. After this, the repo rate has now come down to 5.5 percent.
This is the third consecutive cut in the repo rate by RBI in the last six months. Earlier, a cut of 25 basis points was made in February this year and then again a cut of 25 basis points in April. After which the repo rate came down to 6 percent.
All types of loans and EMI will become cheaper
After this decision of the central bank, all types of loans including car-home will become cheaper. RBI Governor Sanjay Malhotra, while cutting the repo rate, said that his move will provide ample opportunity to investors in the country. The Indian economy will get strengthened amid the slow pace of global growth. Also, domestic demand will be strengthened further.
He said that during the monetary policy meeting, the SDF rate has been reduced from 5.75 percent to 5.25 percent. At the same time, the MSF rate has also been reduced from 6.25 percent to 5.75 percent. Along with this, the RBI Governor has also reduced the Cash Reserve Ratio i.e. CRR by 100 basis points from 4 percent to 3 percent.
Economy expected to pick up pace
The decision by RBI to reduce the repo rate for the third time was taken at a time when US President Donald Trump recently increased the tariff rates on aluminium and steel to 50 percent. India has been a major exporter of both these products. In such a situation, this was considered a big setback for India.
Sanjay Malhotra has expressed hope that the growth rate will remain at 6.5 percent for the financial year 2026. He said that the country’s growth rate could be 6.5% in the first quarter, 6.7% in the second quarter, 6.6% in the third quarter and 6.3% in the fourth quarter.
Better signals in the market
Real estate experts are calling it a better move by the RBI. Vikas Garg, Joint Managing Director of Ganga Realty, says that reducing the repo rate to 5.5% is a positive sign for the real estate sector. The possible reduction in interest rates will make home loans more affordable, which is expected to increase demand, especially among mid-income and first-time homebuyers. He said that this move will provide stability to the residential market and speed up demand. Also, the reduction in the cost of capital for developers will facilitate the implementation and funding of projects. Making the monetary policy stance ‘neutral’ shows that the RBI is moving towards creating a balance between growth and inflation. Overall, this decision will support the recovery of the sector and strengthen confidence in the market.
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