EMIs to come down as RBI cuts repo rate again by 25 bps

In a bid to stimulate the slowing economy, the Reserve Bank of India (RBI) on Wednesday announced a 25 basis point cut in the repo rate, bringing it down from 6.25% to 6%. The decision followed the conclusion of the three-day Monetary Policy Committee (MPC) meeting, which began on April 7, and was led by RBI Governor Sanjay Malhotra. With this, the EMIs will come down bringing a relief to middle class.

“This reduction follows a detailed assessment of the evolving macroeconomic and financial conditions,” said Governor Malhotra, adding that the move was unanimously agreed upon by the committee. This marks the second rate cut in a row, following a similar reduction in February, and comes as the Governor’s second major policy announcement since assuming office in December 2024.

The rate cut is seen as a response to declining inflation, which has now slipped below 4%, and growing concerns about the slowing pace of economic growth. The central bank hopes the move will boost domestic demand, encourage borrowing, and revive investment activity.

In line with the repo rate cut, the Standing Deposit Facility (SDF) rate has been revised to 5.75%, and the Marginal Standing Facility (MSF) rate has been adjusted to 6.25%. These changes are expected to enhance liquidity and reduce the cost of funds for banks.

Importantly, the RBI also shifted its policy stance from 'neutral' to 'accommodative'. This suggests that more rate cuts could follow, should economic indicators continue to show signs of weakness. “The rapidly evolving situation requires continuous monitoring,” Malhotra noted, indicating a more flexible and supportive monetary environment going forward.