RBI cuts interest rates, home loans to get cheaper

MUMBAI: As expected, the Reserve Bank of India (RBI) has cut repo rates again. Reserve Bank Governor Sanjay Malhotra announced that the base interest rate (repo rate) has been reduced from 6.25 percent to 6 percent today.

With the reduction in interest rates, interest rates on housing and auto loans, education, agricultural, gold and personal loans will also come down. This will give significant relief to the people. The main relief is that it will reduce EMIs for loans. The EMI of someone who has taken a home loan of Rs 25 lakh over a repayment period of 20 years will be significantly reduced. If the EMI is presently Rs 22,493 (9 percent interest rate), with today's interest rate cut, the EMI will be reduced to 22,093. The EMI will be reduced to this extent with the interest rate coming down to 8.75 percent.

The Reserve Bank's new policy decision is also taking into account the possible economic weakness at the global level due to US President Donald Trump's new tariff policy. The Reserve Bank of India (RBI) has adopted a policy of reducing the base rate to take a pro-growth stance as the US's 26 percent tariff may affect it. The RBI is also moving ahead with measures to increase liquidity to strengthen the economy. The RBI's confidence has been boosted by the fact that it has achieved the target of keeping inflation below 4 percent in the country.