RBI cuts repo rate by 25 bps; EMIs to fall and loans to become cheaper

New Delhi (The Uttam Hindu): The Reserve Bank of India (RBI) made a major decision at its monetary policy meeting, cutting the repo rate by 25 basis points to 5.25 percent. RBI Governor Sanjay Malhotra stated that this reduction will be effective immediately. This move by the RBI is expected to reduce home loan EMIs, and banks may offer loans at cheaper rates.

Governor Malhotra stated that the past month was challenging, but the situation is expected to improve in the coming months, both in terms of GDP and inflation. The RBI has set an inflation target of 2 percent. Real GDP growth in the second quarter was 8.2 percent, while GDP growth in the first half of the current year is projected to be around 8 percent.

The RBI has cut the repo rate four times so far in 2025. The reductions were 25 basis points in February, 25 basis points in April, 50 basis points in June, and now another 25 basis points. This brings the total reduction this year to 125 basis points, or 1.25 percent. The repo rate had remained stable twice before, but now it has fallen from 6.50 percent to 5.25 percent.

The impact of the repo rate cut was also visible on the stock market. The Sensex rose more than 200 points to trade above 85,500, while the Nifty gained 75 points to reach 26,110. The Nifty Bank also recorded a strong gain of 364 points