The Reserve Bank of India (RBI) announced that the repo rate remains unchanged at 5.25% during today’s monetary policy committee (MPC) meeting. Governor Sanjay Malhotra led the committee, and all members agreed on this decision. This marks the second consecutive time in 2026 that the central bank has kept the rate stable.
At the same time, RBI revised the projected real GDP growth for FY27 from 6.9% to 6.6%, citing global uncertainties and domestic risks that may slightly slow economic activity.
Reasons for Lower GDP Growth Forecast
RBI cited multiple global and domestic factors affecting economic performance. The ongoing conflict between the U.S. and Iran has created supply chain disruptions. Additionally, international crude oil and essential commodity price hikes have further slowed growth. Domestic weather and agricultural uncertainties, including delayed or uneven monsoon patterns, contributed to the moderated GDP forecast.
Historical Repo Rate Changes
Since January 2025, RBI has adjusted the repo rate four times, reducing it from 6.50% to the current 5.25%, providing a cumulative relief of 125 basis points. February 2025 saw no change, while earlier reductions included 0.25% cuts in February and April 2025, a 0.50% cut in June 2025, and another 0.25% reduction in December 2025. These steps helped borrowers reduce interest expenses across loan types.
Impact on Loans and EMIs
For borrowers with floating-rate home loans, EMIs have dropped significantly compared to last year, directly benefiting household budgets. Personal and car loans also enjoy lower interest burdens. Consequently, new borrowers can access loans at favorable rates for housing or vehicles, without worrying about immediate interest rate hikes.
Benefits for Fixed Deposits and Investors
Banks have adjusted fixed deposit rates following repo rate cuts. Savers in senior citizen schemes and general FD products still benefit from competitive returns. RBI’s steady policy ensures investors can plan returns reliably despite market fluctuations.
Stabilizing the Economy
By maintaining the repo rate, RBI strengthens economic stability. Stable rates encourage housing and automobile demand, which in turn supports property and vehicle sectors. Simultaneously, the central bank monitors rising crude prices due to the West Asia crisis to prevent inflationary shocks.
RBI’s decision balances domestic economic growth and global uncertainty management. Consumers benefit from unchanged EMIs, while strategic monitoring of energy markets protects financial stability.
