Loans/EMIs To Get Cheaper As RBI Cuts Repo Rate

To surprise everyone the Reserve Bank of India today reduced the repo rates by 25 basis points or .25 percent. The RBI last lowered the repo rate in August 2017, and also the RBI changed its policy stance to neutral from tightening.

The new repo rate was approved 4-2, this  move will cheer home and car buyers as it leads to lower EMIs for home and auto loans.

This means that commercial banks can borrow short term funds from the RBI at 6.25 percent, this is in line with economic experts.

Further the RBI has also lowered the reverse repo rate to 6 percent and marginal standing facility rate and bank rate currently to 6.5 percent.

The RBI also predicts GDP growth for 2019-20 to be 7.4 percent. RBI Governor  lowered the consumer inflation forecasts to 2.8 percent upto 31st March 2019, and set retail inflation forecast to 3.3 percent for the first half of 2019-2020.

The RBI Governor Shaktikanta Das in a statement, said that this revision would boost private investment and consumption.

The markets spiked briefly after the announcement came out, and also the rupee strengthened by 20 paise against the dollar.

( F.Y.I The Pigeon Express –

Repo Rate – Rate of interest at which RBI lends money.

Reverse Repo Rate – Rate of interest at which RBI borrows money.)