RBI cuts repo rate to 5.25%, loans to get cheaper

In a welcome move for more than millions of Indians struggling with high loan costs, the Reserve Bank of India (RBI) on Friday cut its key repo rate by 25 basis points to 5.25%, making it the second reduction this year after a similar slash in June. This decision, taken unanimously by the Monetary Policy Committee (MPC) after a three-day meeting, comes as inflation stays low at around 2% for the full year and growth picks up steam with a fresh GDP forecast of 7.3% for the current financial year, up from 6.8%.

RBI Governor Sanjay Malhotra said the move supports economic activity while keeping an eye on the rupee's recent dip, and it includes extra steps like buying Rs 1 lakh crore in bonds to pump liquidity into banks.The rate cut means good news for everyday borrowers—home and car loans should soon get cheaper, with lower EMIs hitting pockets in the coming months as banks pass on the benefit. Retail inflation is seen staying soft, with the first quarter of next year at just 3.9%, down from earlier worries of 4.5%. But the RBI isn't ignoring risks like rising gold prices or global trade tensions; it kept its policy stance neutral, ready to tweak if needed.

Looking ahead, as per reports this could spark more spending and investment, helping India aim for that 8% growth dream. Financial markets cheered the news with stocks climbing and bond yields easing, while the rupee held steady. Governor Malhotra wrapped up by noting the year's strong growth despite global bumps, adding a hopeful tone: "We approach the new year with vigour and determination."