RBI Repo Rate: Loan worries to ease in the new year! RBI may cut the repo rate by 0.25%, find out what benefits you’ll get
RBI Repo Rate: The beginning of 2026 could bring significant relief to those struggling with hefty monthly installments (EMIs). A new economic report has raised hopes that the Reserve Bank of India (RBI) may cut the repo rate by 25 basis points (0.25%) in the near future. If this decision is implemented, everything from your home loan to your car loan will become cheaper.
What is the repo rate and why does it reduce EMIs
You can call the repo rate the ‘root of interest rates,’ as it is the rate at which the RBI lends money to other banks. The simple math is that when the RBI reduces the repo rate, it becomes cheaper for banks to raise funds, and they pass on this benefit to their customers in the form of lower interest rates, automatically reducing the burden of your home or car loan EMIs.
Why are rate cuts being speculated
According to market experts and recent reports, inflation in the country is now gradually coming under control. When inflation is low, the RBI reduces interest rates to boost the economy so that people invest and spend more. This ‘dovish stance’ makes a rate cut in the new year highly probable.
Which sectors will benefit
Relief for the middle class: The biggest benefit will be for those who have long-term home loans of 20-30 years. Even a 0.25% reduction in interest can save lakhs of rupees in the long run.Real estate and auto sectors: When loans become cheaper, people are encouraged to buy homes and cars. This brings money into the market and boosts business Personal loans: Installments on personal loans taken for minor needs will also decrease, making it easier to manage the monthly budget.
Should you take out a new loan now? If you’re planning to buy a new house or car, waiting a few weeks could be beneficial. A decision on this is expected at the next meeting of the RBI’s Monetary Policy Committee (MPC). Experts advise that unless it’s absolutely necessary, it would be wise to wait for the potentially lower interest rates that may be available in the new year.