Major relief for home loan customers as RBI cuts repo rate by 50 bps, lowers inflation forecast to 3.7%
RBI cuts repo rate: In a major move to support economic momentum, the Reserve Bank of India (RBI) has reduced its key lending rate—the repo rate—by 50 basis points, bringing it down to 5.5%. The decision, announced during the bi-monthly Monetary Policy Committee (MPC) meeting chaired by RBI Governor Sanjay Malhotra, was taken unanimously.
The rate cut is expected to bring relief to borrowers, especially home loan customers, as banks may soon pass on the benefits in the form of lower EMIs on long-term loans.
The RBI Governor said despite a fragile global economic environment and downward revisions in global trade projections, India was poised to maintain its growth trajectory.
“India’s strength lies in the robust balance sheets of its five key economic sectors. Our economy continues to offer vast opportunities for both domestic and international investors. We are already growing fast and aim to accelerate further,” he stated during the announcement.
On the inflation front, the RBI chief confirmed that price pressures have eased significantly. Both near-term and medium-term inflation outlooks are positive, with food inflation expected to remain subdued and core inflation likely to stay benign.
Reflecting this improved scenario, the RBI has lowered its retail inflation projection for the current financial year to 3.7%, down from its earlier estimate of 4% made in April.
Key economic indicators also paint an encouraging picture. According to the RBI Governor, private consumption remains healthy, and discretionary spending is gradually rising. Industrial production is picking up pace, while the services sector is expected to retain its momentum. Demand from rural areas remains stable, and urban consumption is improving.
Looking ahead, the RBI has retained its GDP growth forecast at 6.5% for FY2025. The quarterly breakdown is as follows:
Q1 (April-June): 2.9%
Q2 (July-September): 3.4%
Q3 (October-December): 3.9%
Q4 (January-March): 4.4%
- With inputs from agencies
