"After a detailed assessment of the evolving macroeconomic and financial conditions and outlook, the MPC voted unanimously to reduce the policy repo rate by 25 basis points to 6% with immediate effect," reported Sanjay Malhotra.
After a 25 basis point decrease in February, this is the second consecutive rate cut. Additionally, it is Sanjay Malhotra's second significant speech since assuming the role of RBI governor in december 2024.
The liquidity adjustment facility changed the marginal standing facility rate (MSF rate) to 6.25% and the standing deposit facility (SDF) rate to 5.75%.
Will home Loans Get Cheaper?
According to CA (Dr.) suresh Surana, house loan borrowers should benefit from the Reserve bank of India's Monetary Policy Committee's (MPC) recent decision to lower the repo rate by 25 basis points to 6%.
An important factor in figuring out the total cost of borrowing in the economy is the repo rate, which is the rate at which the RBI loans money to commercial banks. A decrease in this rate usually decreases banks' cost of funds, which allows them to pass the savings on to customers in the form of lower lending rates," he said.
He added that a downward revision is expected to result in reduced interest rates for borrowers, especially those with floating rate loans, because the majority of house loans nowadays are based on external benchmarks like the RBI's repo rate.
The benefit would typically start to accrue for current borrowers on the next reset date of their loan, which is typically every quarter or every six months. However, depending on how quickly specific banks adjust their lending rates, new borrowers might feel the impact sooner," he warned.
Additionally, the RBI adopted a more "accommodative" posture in place of its previous neutral one.
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