RBI Cuts Interest Rate: Home, Personal, and Auto Loans to Get Cheaper, Check Details
In a move aimed at boosting economic growth, the Reserve Bank of India (RBI) has announced a cut in the repo rate by 25 basis points, bringing it down from 6.25% to 6%. This
New Delhi: In a move aimed at boosting economic growth, the Reserve Bank of India (RBI) has announced a cut in the repo rate by 25 basis points, bringing it down from 6.25% to 6%. This is the second consecutive repo rate cut by the central bank this year, signaling a clear intent to ease lending and encourage spending.
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Loans to Become Cheaper
With the reduction in the repo rate, interest rates on home, personal, and auto loans are expected to decrease, bringing relief to borrowers. Commercial banks are likely to follow the RBI’s lead by lowering their lending rates, making loans more affordable for individuals and businesses.
MPC’s Unanimous Decision
The decision was made unanimously by the Monetary Policy Committee (MPC), reflecting a strong consensus among policymakers to provide a stimulus to the economy. The RBI Governor stated that the central bank continues to monitor global economic conditions, especially in the wake of rising trade tensions.
Global Factors at Play
The RBI also cited U.S. President Donald Trump’s recent imposition of high tariffs on Indian imports as a cause for concern. These developments could impact India’s export sector, prompting the RBI to take pre-emptive measures to sustain economic stability.
What Is the Repo Rate?
The repo rate is the interest rate at which commercial banks borrow money from the RBI by selling government securities. It is a key monetary policy tool used to control inflation and liquidity in the market.
- When inflation rises, the RBI increases the repo rate to restrict the money supply.
- When growth needs a boost, as in the current scenario, the RBI lowers the repo rate to make borrowing easier.
By cutting the repo rate, the RBI is aiming to increase the availability of money in the system, encouraging banks to lend more and support economic activity.
This latest cut is expected to provide much-needed support to the Indian economy amid ongoing global uncertainties.
