RBI repo rate cut: The Reserve Bank of India (RBI) is set to announce its updated repo rate this Friday, and the market is buzzing with mixed expectations. Economists, financial experts and global research firms have shared different views on whether the central bank will cut interest rates once again or maintain the current level.
Experts Divided on Possible Rate Cut
A large number of financial analysts, including CRISIL Chief Economist Dharmakirti Joshi, DBS Bank’s Radhika Rao, and global research houses like HSBC and Morgan Stanley, expect the RBI to reduce the repo rate by 25 basis points, bringing it down from 5.50% to 5.25%. Some experts also believe a rate cut of 25–50 bps is possible.
However, not everyone agrees. ICRA’s Chief Economist Aditi Nair feels the RBI may prefer to keep the repo rate unchanged this time. The mixed opinions clearly show that the market is uncertain, and any move from the RBI could impact borrowers and depositors immediately.
Repo Rate Cuts Already Done in 2025
So far this year, RBI has cut the repo rate three times—25 bps each in February and April, followed by a larger 50 bps cut in June. At the start of 2025, the repo rate was 6.5%, which has gradually reduced to 5.5%.
Now the big question is: How will another possible cut affect your loans and fixed deposits?
How a Repo Rate Cut Affects Home Loan EMI
If the RBI lowers the repo rate again by 0.25%, banks are likely to reduce their lending rates. This directly benefits home loan borrowers.
For example, on a ₹50 lakh home loan with a 20-year tenure, a 25 bps reduction may reduce your EMI by around ₹1,000 per month. Over the entire loan duration, borrowers may save up to ₹2.5 lakh in total interest.
If the repo rate remains unchanged, EMI will not come down immediately. However, banks may still offer better transmission of previous cuts over the next few months.
Smart Tip:
Financial planners suggest increasing your EMI by 5–10% when rates fall. This reduces both your loan tenure and total interest.
FD Returns: What Depositors Should Expect
A repo rate cut usually leads to a reduction in fixed deposit rates, as banks get cheaper funds from the RBI. This may reduce earnings for depositors, especially senior citizens who depend heavily on FDs.
If the RBI keeps rates unchanged, depositors can continue earning at current FD rates for now. Those concerned about declining returns can explore options like:
- Debt mutual funds
- Government bonds
- Small savings schemes
- Senior citizen special FD schemes
Currently, most major banks such as SBI, HDFC, ICICI, PNB and Bank of India offer around 6.25% interest on a 1-year FD.
