RBI Cuts Repo Rate by 25 Basis Points to 6.25% — Home Loans to Get Cheaper, Sensex Surges 680 Points
The Reserve Bank of India's Monetary Policy Committee cut the policy repo rate by 25 basis points to 6.25%, the first rate reduction in 15 months, citing easing inflation and the need to support economic growth.
Representative image. Photo: Nationalism News
The Reserve Bank of India's six-member Monetary Policy Committee voted 5-1 on Saturday to reduce the policy repo rate by 25 basis points to 6.25%, marking the first rate cut since November 2024 and signalling a shift toward a more accommodative stance as inflation eases and global growth slows.
RBI Governor Sanjay Das, announcing the decision at a press conference in Mumbai, said the committee was "cautiously optimistic" about India's growth trajectory and that inflation had "durably moderated" to 4.1% in February 2026, well within the central bank's 2-6% tolerance band.
The Sensex reacted immediately, surging 680 points or 0.93% to close at 74,320, while the Nifty 50 gained 198 points. Banking stocks led the rally with HDFC Bank rising 4.2%, SBI gaining 3.8% and Axis Bank advancing 3.1%.
For the average home loan borrower with an outstanding loan of Rs 50 lakh at 9% interest over 20 years, the rate cut is expected to reduce the monthly EMI by approximately Rs 800-1,200, depending on the bank's transmission speed. Banks are expected to pass on the rate reduction within 30-60 days.
Fixed deposit holders, however, face headwinds. Major banks are expected to cut FD rates by 15-25 basis points within the next month, reducing returns for conservative savers. "This is a classic trade-off between growth and savings," said an HDFC Securities analyst.
The MPC also revised its GDP growth forecast for 2026-27 upward to 7.4% from 7.2%, citing strong domestic consumption, resilient services exports and government infrastructure spending. Inflation is projected to average 4.0% in the first half of the next fiscal year.
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