Repo Rate Announced: Here's What RBI's Decision Means For Your Home Loan EMI

New Delhi: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to maintain the repo rate at 5.25 percent in the second consecutive meeting. While presenting the policy review on Tuesday, RBI Governor Sanjay Malhotra said that in view of the uncertainties created at the global level, increasing tension in West Asia and fluctuations in crude oil prices, no change has been made in the interest rates at present. The direct effect of this decision will be that at present there will be no change in the monthly installment (EMI) of home loan, auto loan and other floating rate loans.

What were the important decisions of MPC?

The Monetary Policy Committee has kept the repo rate unchanged at 5.25 percent. Along with this, Standing Deposit Facility (SDF) rate has been maintained at 5 percent and Marginal Standing Facility (MSF) and bank rate have been maintained at 5.50 percent. RBI says that keeping interest rates stable in the current economic conditions will be a balanced step for the economy and financial markets.

What will be the impact on EMI?

Due to no change in the repo rate, the cost for banks to take loan from RBI will also remain the same as before. In such a situation, there will be no immediate change in the EMI of those customers who have taken home loan, car loan or other retail loans on floating interest rate. Banks are also not indicating the possibility of any major revision in their interest rates at present. This means that interest rates for both existing borrowers and new borrowers are expected to remain stable for now.

What did RBI say on the global situation?

Governor Sanjay Malhotra said that geopolitical tensions still remain a matter of concern in many parts of the world. The ongoing conflict in West Asia and fluctuations in crude oil prices in the international market may have an impact on the global economy. In such an environment, it is necessary to adopt a cautious monetary policy. He said that India's economy is in a strong position, but external risks are being constantly monitored.

What is the estimate regarding growth rate and inflation?

RBI has increased the estimate of gross domestic product (GDP) growth rate for the financial year 2026-27 to 6.7 percent, which was earlier 6.6 percent. At the same time, the estimate of retail inflation has been reduced to 5 percent. The central bank believes that some pressure on food prices is likely to remain, but better supply and policy measures will help keep inflation under control.

What could be RBI's strategy going forward?

Experts believe that the next step of RBI in the coming months will depend on inflation, global economic situation and domestic demand situation. If inflation remains controlled and global conditions are favourable, new decisions can be taken regarding interest rates in future. At present, the Central Bank has clearly indicated that its priority is to maintain the pace of economic growth while keeping inflation under control. In such a situation, currently the loan takers will have to wait for both relief in EMI or additional burden.