Home, auto loans to get cheaper as RBI cuts interest rates

The Reserve Bank of India (RBI) on Friday delivered its first interest rate reduction in six months, a move expected to bring relief to home, auto and business loan borrowers.

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The central bank also unveiled a liquidity plan of Rs 1 lakh crore to steady financial conditions as the economy adjusts to the impact of steep US tariffs.

The Monetary Policy Committee, chaired by RBI Governor Sanjay Malhotra, voted unanimously to reduce the benchmark repo rate by 25 basis points to 5.25 per cent while maintaining a neutral stance. The decision follows a period of strain after US President Donald Trump imposed a 50 per cent tariff on Indian goods, which contributed to falling exports, a widening trade deficit and a record low for the rupee.

RBI raised the GDP growth projection to 7.3 per cent for the current fiscal from its earlier estimate of 6.8 per cent following robust economic performance in the July-September quarter.

The Gross Domestic Product (GDP) registered a sixquarter high growth of 8.2 percent in Q2 of 2025-26, underpinned by resilient domestic demand amidst global trade and policy uncertainties.