RBI Repo Rate News : The Reserve Bank of India (RBI) announced their monetary policy decision on 9th April, where they slashed repo rates by 25 basis points (bps) It now stands at 6% from 6.25%. This is a second cut since February when rates were brought down after nearly five years! This move comes as a response to support the struggling economy amidst the recent tariff hikes imposed by the US. Understand what a repo rate reduction is and how it could impact you in this short article.
What is RBI Repo Rate
RBI Repo Rate News : Repo Rate is the interest rate paid by commercial banks when they borrow money from the RBI. Consider RBI as their source of funds when they run out of money.
Repo rate reduction means an overall reduction in the rate of interest to the consumer. Repo rate is an effective tool used by the RBI to regulate the flow of money across the nation.
RBI Monetary Policy Repo Rate Adjustments
RBI Repo Rate News : Let us have a look at the adjustments made by RBI in their Monetary Policy:
- Repo Rate: Reduced by 25 basis points from 6.25% to 6.00%.
- Standing Deposit Facility (SDF) Rate: Adjusted to 5.75%.
- Marginal Standing Facility (MSF) Rate: Set at 6.25%.
The first monetary policy for this financial year would greatly benefit the borrowers with the rates reduced. This 25 bps rate cut is the second consecutive cut in two months, and industry experts believe it could nudge banks to finally start passing on the benefit to customers.
RBI Governor Sanjay Malhotra stated that-
“The global economic outlook is fast changing. The recent trade tariff-related measures have exacerbated uncertainties clouding the economic outlook across regions, posing new headwinds for global growth and inflation. Amidst this turbulence, the US dollar has weakened appreciably; bond yields have softened significantly; equity markets are correcting; and crude oil prices have fallen to their lowest in over three years.” (Source: Press Release RBI)
Looking ahead, RBI’s monetary focus has now changed from ‘neutral’ to ‘accommodative’ — for sustaining the economy. And they’ll be open to cutting rates in future as well. It simply means that access to money becomes easy with softer interest rates.
RBI Monetary Policy 2025
The link to the Post Monetary Policy Press Conference by the Governor of the RBI Shri Sanjay Malhotra has been given in the following tweet for exploration.
The Cause of Reductions : US Tariffs
RBI Repo Rate News : You may be wondering — Why’s RBI reducing the repo rates out of nowhere? That too for a second time? Well that’s because of the slowing economic growth due to the recent tariffs imposed by the US.
Also Read: RBI’s New Measures: Making Digital Banking Safer
The imposition of tariffs by the US President Donald Trump has been increasing the risk for World’s biggest economy. That brings us to RBI’s response to moderate the inflation and stimulate the economy by slashing the borrowing costs by 0.25% again.
RBI Repo Rate Cut Impact On You
RBI Repo Rate News : The deduction of repo rates by 25 points would give a big relief to the home loan borrowers who have been under a huge burden while paying high interest rates for years.
And that’s not all — These lowered interest rates would substantially also benefit the new borrowers in the near future!
If the banks actually pass on the benefit from the recent rate cuts to the borrowers, it’ll be great news for homebuyers who have been holding back all this time looking at affordable housing.
With lower interest rates, people will save more — and that extra money often flows back into spending, boosting the economy.
RBI Repo Rate Cut Impact On Your Monthly EMIs
RBI Repo Rate News : Imagine a borrower who has taken a home loan of ₹50 lakh with a tenure of 20 years, and the interest rate is currently 9%. At this rate, their monthly EMI comes out to approximately ₹44,986.
Now, if the bank decides to pass on the entire 0.25% reduction announced by the RBI, bringing the interest rate down to 8.5%, the EMI would reduce to around ₹43,391. That’s a monthly saving of ₹1,595.
Over the course of a year, this adds up to ₹19,140. And if we look at the complete loan tenure of 20 years, the total savings would cross ₹3.8 lakh- And that’s a big amount!
This clearly shows how even a small cut in repo rates can offer substantial relief to borrowers, especially those repaying large loans over long periods. This extra money can now be saved, invested, or simply used to ease monthly financial pressure.
The Role of Banks
RBI Repo Rate News : While the RBI sets the tone with its monetary policy decisions, the actual benefit to borrowers depends largely on how banks respond.
RBI has the central control over all the banks and consequently banks act as a mediator between the consumer and the RBI. When the RBI reduces the repo rate, it essentially lowers the cost at which banks can borrow money. However, whether banks pass this reduced cost on to customers through lower lending rates isn’t always immediate — or guaranteed.
Some primary reasons why banks are more cautious about instantly reflecting the new rate changes in the lending rates:
- Cost of Funds: A bank’s own cost of borrowing (like interest paid on deposits) affects how quickly and how much they can afford to reduce lending rates.
- Benchmarking Methods: Loans linked to the Marginal Cost of Funds-based Lending Rate (MCLR) are slower to react than those pegged to external benchmarks like the repo rate. MCLR is influenced more by the bank’s internal cost structures.
Global Tensions Impact on RBI Repo Rate Cut
RBI Repo Rate News : Because of the recent imposition of tariffs by the government of the United States of America (USA), the entire market has been disturbed, there are always high chances that inflations could rise
If crude oil prices shoot up, inflation would occur. And if that happens, the RBI might have to hold interest rates steady — or even push them higher — instead of cutting them.
The Final Take!
This policy brings much-needed relief—but whether borrowers will actually benefit depends on how banks respond. Given that banks have previously hesitated in passing on the full benefits of these repo rate cuts to borrowers in the past.
Also, the effectiveness of this repo rate cut may be influenced by external factors, such as ongoing trade disputes and their impact on global economic conditions. That said, If the global market faces a disparity then it won’t be easy for RBI to reduce the rates either.
What Savings Can’t Solve
The reduction in the repo rates by the RBI can certainly reduce our material burdens a bit more easily. However, the spiritual angle of it educates us that the real burden of sins and sorrows cannot be relieved by these monetary policies.
Jagatguru Tatvdarshi Sant Rampal Ji Maharaj educates us about an easier way to attain peace and to get rid of your sins as well – by following the method of devotion mentioned in our sacred scriptures instead of blindly following the rituals. Material gains are not always permanent but the wealth attained through right spiritual mantras given by Him can certainly make you richer both financially and spiritually.
In order to know more about His in-depth true spiritual knowledge, you can visit www.jagatgururampalji.org to order a free copy of His book ‘Gyan Ganga’ or you can watch His spiritual sermons at Sadhna TV channel daily from 7:30 PM onwards.
