On February 7, 2025, the Reserve Bank of India (RBI) cut the repo rate by 25 basis points to 6.25%. Governor Sanjay Malhotra led this decision, marking the first rate cut in nearly five years. The goal is to boost economic growth and support consumption amid global economic uncertainties.
Home loan borrowers will benefit from lower interest payouts and reduced EMIs. Financial experts believe this move will increase market liquidity, encourage borrowing, and stimulate economic activity. Lower interest rates will help borrowers save on monthly EMIs, making housing loans more affordable and potentially boosting demand in the real estate sector.
The decision followed a pattern of easing consumer price inflation, projected to drop to 4.5%-4.7% in January 2025 from 5.2% in December 2024. Additionally, the GDP growth forecast for FY25 is expected to slow to 6.4%, the lowest in four years. The recent Union Budget 2025 also played a role, adjusting income tax slabs to stimulate spending.
Overall, the RBI’s proactive approach aims to tackle economic challenges and support growth, benefiting borrowers and the broader economy.
