Your EMI burden will ease now as RBI cuts key rate for 2nd time

Home, auto and other retail loans are likely to become cheaper as the RBI's Monetary Policy Committee (MPC) on Wednesday announced a 25-basis-point (bps) cut in the repo rate to 6 per cent to support economic growth amid growing global uncertainties.

- TDG NETWORK

Further, it signalled more easing to come.

The repo rate is the rate at which the RBI lends money to banks to meet their short-term funding needs. With a 25 bps cut in the repo rate, all external benchmark lending rates (EBLR) linked to it will come down.

The move lowers borrowing costs to the lowest level since November 2022, amid easing inflation and a fall in oil prices.

RBI changed its policy stance to "accommodative" from "neutral", indicating the possibility of more rate cuts in future, Governor Sanjay Malhotra said while announcing the MPC decisions.

RBI also lowered its estimate for economic growth to 6.5 per cent for 2025-26 fiscal year from 6.7 per cent earlier. The inflation projection was also lowered to 4 per cent from 4.2 per cent, keeping it within the target range of 2-6 per cent.

The Indian economy grew by 6.5 per cent in the fiscal year ended March 31 (2024-25), its weakest pace since the pandemic.