Borrowers can expect lower EMIs on home and personal loans as the Reserve Bank of India (RBI) cut its key repo rate by 25 basis points to 6% on Wednesday. This is the second rate cut this year, aimed at stimulating domestic demand amid mounting global trade tensions.
&ldquo;The Monetary Policy Committee voted unanimously to reduce the repo rate,&rdquo; said RBI Governor Sanjay Malhotra. He added that the move would ease borrowing costs for banks and encourage them to pass on the benefits to consumers.
The repo rate&mdash;the rate at which the RBI lends money to commercial banks &mdash; was previously cut to 6.25% in February. With Wednesday&rsquo;s decision, it stands at its lowest level since April 2018.
Trade Frictions Cast Shadow on Growth
The rate cut comes just days after the Trump administration imposed reciprocal tariffs on Indian exports, triggering fresh concerns about global trade instability.
&ldquo;The dent on global growth due to trade frictions will impede domestic growth,&rdquo; Malhotra warned. &ldquo;Higher tariffs may have an impact on net exports. India is very proactively engaging with the US administration on trade.&rdquo;
While the full impact of these developments is still uncertain, Malhotra said the central bank remains confident in managing domestic growth challenges.
Mixed Economic Outlook
The RBI downgraded its GDP growth estimate for the current financial year to 6.5%, a 20 basis point cut from its previous forecast. However, Malhotra struck a hopeful tone on domestic drivers.
&ldquo;The prospects for the agriculture sector remain bright and manufacturing activity is showing signs of revival,&rdquo; he said. &ldquo;Services sector continues to show resilience. Urban consumption is picking up with an uptick in discretionary spending.&rdquo;
He also pointed to improved health of corporate and banking balance sheets.
Inflation Still Below Target
The Monetary Policy Committee noted that inflation remains below the central bank&rsquo;s 4% target, helped by a sharp fall in food prices. This gave the RBI room to support growth through monetary easing.
Malhotra said the RBI will continue to closely monitor inflation risks arising from global volatility.
What It Means for You
With the repo rate now at 6%, banks are expected to adjust their lending rates, leading to a drop in interest rates for loans tied to external benchmarks&mdash;including most home and auto loans. Borrowers could see their monthly installments lower in the coming billing cycles, depending on how quickly their banks revise lending rates.
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RBI cuts GDP growth forecast for FY to 6.5%  (File Photo)

Move comes amid global uncertainty, Trump tariffs on Indian exports

Home Loan EMIs Set to Ease as RBI Cuts Repo Rate to 6%

Move comes amid global uncertainty, Trump tariffs on Indian exports

April 9, 2025 | 16:42 IST