The Indian Reserve Bank (RBI) reduces the repo interest rate on 25 points, reducing it from 6.25% to 6%, expected to weaken the loan costs for individuals and business. The decision to play the FY26 Monetary Commission (MPC) in the FY26 Match (MPC) match. This is the second consecutive cut in February after the reduction of a similar exchange rate.
What is repo interest?
Is Repo Rate: Is the interest rate by which RBI provides money to commercial banks for short-term needs, usually against government securities? This is a basic tool used by the Central Bank to manage inflation and liquidity in the economy.
Why is RBI reduced the repo interest rate?
RBI lowers repo’s interest when he wants to inject more liquidity into the system and promote economic activity, especially when inflation is controlled. For FY26, RBI predicts the consumer price index (CPI) inflation by 4%, comfortably within its target – 2-6%.
The decision also affected the tension on the tension between US President Donald Trump, as they risk for global growth and India exports.
How will it affect you?
- The loan can be cheaper: RPA and financial institutions can take lower costs from RBI. This can reduce home loans, auto loans and new personal loans. The actual reduction of emis depends on how fast and how far and to what extent individual banks transfer to consumers.
- The impact on fixed deposits. While borrowers can be happy, fixed deposit (FD) investors can see disorderly. As lending rates are lower, banks can reduce deposit interest rates to protect their margins. New FD investors can get lower revenues than those who were closed earlier at earlier pace. If you plan to invest in FDs, it can be wise before you can review it before banks will review down.
- Individual loan borrowers. If you already have a personal loan, especially at a fixed interest rate, your EMI will probably stay the same. But if you plan to take a new personal loan, the reduction of the exchange rate may mean low interest rates and more affordable repayments.
Governor Sanjay Malhotra said that India’s economy is on track, designing GDP growth by 6.5% to 2025-26. This is a quarterly breakdown.
- Q1: 6.5%
- Q2. 6.7%
- Q3: 6.6%
- Q4. 6.3%
He also said that the agricultural sector seemed promising to the level of a healthy reservoir and a strong harvest. The fields of production and services show signs of rebirth, and urban consumption is gradually gathered. Investment activities are increasing, supporting strong corporate and bank balance and continuous government focuses on infrastructure.
