The emiss loan probably decreases as the RBI reduces the repository rate by 25 PB to 6.25%

Governor of RBI Sanjay Malhotra

He India Reserve Bank (RBI) has announced a cut in its key repo rate in 25 basic points to 6.25%, marking the first rate cut in almost five years. The decision is expected to be taken at the end of the Meeting of the Monetary Policy Committee (MPC) held from February 5 to 7, reduce the Loan EMI and provide relief to the borrowers.
Governor of RBI Sanjay MalhotraWho presided over his first MPC meeting, announced the broadly expected movement on Friday morning. The six -members committee, which includes three RBI members and three external members, voted unanimously in favor of reducing the repository rate after keeping it without changes for eleven consecutive meetings.
“The Monetary Policy Committee unanimously decided to reduce the policy rate by 25 basic points from 6.5% to 6.25%,” said RBI Malhotra governor in a presierman after the MPC meeting.

“Inflation orientation has served the Indian economy very well. Average inflation has remained lower since the introduction of the monetary policy frame,” said RBI’s governor.
Discussing the dynamics of the global financial market, Malhotra said that expectations regarding the size and rhythm of tariff cuts in the United States had led to a strengthening of the US dollar.
He said: “The global economic context remains challenging. The global economy is growing below the historical average, despite the fact that high frequency indicators suggest resilience, along with continuous expansion in trade. Progress in global disinflation It is stagnating, hindered by the inflation of services prices.
This marks the reduction of the first rate since May 2020 and is intended to support economic growth, which is projected to reduce speed to a minimum of four years. The reduction of the interest rate follows the announcement of the Minister of Finance Nirmala Sitharaman in the 2025-26 budget, which introduced the largest tax exemption for the middle class to stimulate consumption in the midst of the slowest growth of the economy from the economy from the pandemic.
According to Reuters, Boman Irani, president of the Confederation of Associations of Real Estate Developers of India, said: “The RBI repo rate complements the recent budgetary measures designed to boost spending and stimulate economic growth. This monetary policy was Imperative, especially after the recent 50 -base cut in the cash reserve ratio (CRR), which has already injected significant liquidity into the banking system.
“While the current cut can have a limited direct impact, we anticipate that an additional rate reduction at the next MPC meeting will provide a stronger impulse to the general demand, accelerating housing sales, particularly in the average income segments and affordable “.
In addition, Reuters reported that Upasna Bhardwaj, chief economist of Kotak Mahindra Bank, Mumbai, commented: “The MPC’s decision to reduce the repository rate by 25 BPS and maintain a ‘neutral’ posture is completely in line with our expectations. Outlook has provided space for monetary flexibility.
The Central Bank has faced a delicate act of balance between stimulating economic growth and inflation management. Although the economy is expected to expand between 6.3% -6.8% in the next fiscal year, it remains below the growth of 8.2% registered in fiscal year 2024. However, inflation has remained above the objective in the medium 4% RBI deadline for most of last year, further complicating the policy decisions of the Central Bank.
Despite the deceleration in economic growth, the rupee has been under pressure, which leads to the RBI to intervene through the sale of the dollar to stabilize the currency. Economists have divided at the time of the cut of the rate, since the inflation of the nucleus remains below 4%, while the inflation of the main remains a concern.
The RBI has also focused on guaranteeing adequate liquidity in the banking system. At the end of January, the Central Bank introduced measures to inject 1.5 billion rupees ($ 17.22 billion) in the financial sector. Investors now expect additional steps of the RBI, including a possible reduction in the cash reserve ratio to further support liquidity.
The Government has projected a fiscal deficit of the whole year of 4.8% of GDP for the current financial year, with the aim of reducing 4.4% by 2025-26. The last monetary policy decision is expected to complement fiscal measures to boost economic recovery and guarantee financial stability in the coming months.
With the RBI rates cut, borrowers can expect lower monthly fees (EMI) at home, the car and other loans, providing some relief in the midst of continuous economic uncertainties. However, other policy adjustments will depend on inflation trends and global economic developments in the coming months.
(With agencies inputs)