Good News for Home, Personnel loan holders, buyers; RBI reduces Repo Rate
Kanwar Inder singh/ royalpatiala.in News/ February 7,2025
The Reserve Bank of India (RBI) under the new Governor Sanjay Malhotra’s leadership has cut the repo rate to 6.25% — the interest rate at which the central bank lends money to commercial banks.— for the first time in nearly five years.
After holding the repo rate at 6.50 per cent for two years, the Reserve Bank of India’s (RBI) six-member Monetary Policy Committee (MPC) has reduced the key policy rate by 25 basis points (bps) to 6.25 per cent. While this marks the first repo rate cut in nearly five years, the RBI decision will lead to a fall in interest rates and equated monthly instalments (EMIs) on home and personal loans.
“The MPC, after a detailed assessment of the evolving macroeconomic and financial developments and the economic outlook, decided unanimously to reduce the policy repo rate by 25 basis points from 6.50 per cent to 6.25 per cent. Consequently, the standing deposit facility (SDF) rate shall be 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate shall be 6.50 per cent. The MPC also decided unanimously to continue with the neutral stance and remain unambiguously focussed on a durable alignment of inflation with the target, while supporting growth” said Puneet Pancholy, Chief General Manager, RBI.
Good News for Home, Personnel loan holders, buyers; RBI reduces Repo Rate.Due to higher repo rate, with borrowing costs rising, banks had to offer higher FD rates to attract deposits and maintain liquidity.
The RBI’s MPC, in a unanimous decision, lowered the repo rate in a bid to stimulate economic activity by making borrowing cheaper, thereby encouraging spending and investment.
Why did RBI cut Repo rate?
The main reason behind the cut in Repo rate is to stimulate economic growth by making borrowing cheaper for individuals and businesses, leading to increased spending and investment.
