The Reserve Bank of India (RBI) on Thursday announced its Monetary Policy decision, keeping the repo rate unchanged at 6.5 per cent for the ninth consecutive time.
The decision was made by the Monetary Policy Committee (MPC) during its third bi-monthly policy meeting for the financial year 2024-25, held from Tuesday to Thursday.
RBI Governor Shaktikanta Das cited stable inflation levels as a key factor in the decision. Retail inflation rose to 5.08 per cent year-on-year in June due to increasing food prices but has remained below 5 per cent since March and under 6 per cent since September last year. The CPI-based inflation has been within the RBI’s tolerance range of 2-6 per cent for the past ten months.
How this affects your loan EMIs
Here is a breakdown of how this decision will impact various types of loans:
Home Loans: The interest rate for home loans linked to the repo rate will stay the same, meaning EMIs for existing home loans will not increase.Auto Loans: Similar to home loans, auto loans linked to the repo rate will not see a change in their interest rates.Personal Loans: For those with personal loans tied to the repo rate, the EMIs will, again, remain unchanged.New Borrowers: Prospective borrowers looking to take out new loans can expect interest rates to remain consistent with the current levels.
The RBI decision ensures borrowing costs do not rise, which can encourage spending and investment.
Key takeaways from the policy meeting:
India’s foreign exchange reserves are at a record high of $675 billion.
The country’s external sector is strong.Domestic growth is steady, with urban consumption and manufacturing doing well.Inflation is expected to decrease gradually. The RBI predicts inflation will be 4.5 per cent for the financial year 2024-25.The RBI expects India’s economy to grow 7.2 per cent in the FY 2024-25. Growth is expected to be steady in the coming quarters.Quarterly GDP growth projections are between 7.1 percent and 7.4 percent.The CPI inflation forecast for FY25 is 4.5 percent.The inflation forecast for Q1FY26 is 4.4 percent.
