The Reserve Bank of India (RBI) can bring it to 5.75% by cutting the repo rate by 0.25% on June 6, under the monetary policy review. If this happens, loans like home loan and auto loans can be cheap and the chances of EMI decreasing will increase.
Rbi governor Sanjay Malhotra At 10 am today, the Monetary Policy Committee – MPC will announce the decisions of the meeting. This meeting started from 4 June.
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Repo rate reduced by 0.50% so far this year
In February this year, RBI reduced the repo rate from 6.5% to 6.25%. Then the April meeting was reduced by 0.25%. That is, in the beginning of FY 2025-26, the repo rate has been reduced by 0.50%.
What will be the effect if the repo rate decreases?
- Bank loan interest rates may decrease
- Investment in the housing sector will increase, which will boost the real estate sector
- EMI reduced burden on customers’ pockets will be lighter
- Auto, personal and education loans can also be cheap
What is a repo rate?
Repo Rate is the rate on which RBI gives short -term loans to the country’s banks. When this rate decreases, banks get cheaper funds and they give loans to common people at low interest.
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Why does RBI change repo rate?
| Situation | What does RBI do? | Motive |
|---|---|---|
| When inflation increases | Repo increases rate | Decrease |
| In case of economic lethargy | Reduces repo rate | Promote demand |
Increasing the repo rate makes the debt expensive, due to which the amount of money in the market decreases and control of inflation can be found. At the same time, when there is lethargy in the economy, the loans are cheap by reducing the repo rate and the demand is promoted.
How many times does RBI meet?
RBI’s Monetary Policy Committee (MPC) consists of a total of 6 members – 3 from RBI and 3 appointed by the Government of India. This committee meets every two months.
A total of 6 meetings of RBI are scheduled in FY 2025-26. The first meeting has been held from 7 to 9 April. The decision of the next meeting will be declared today, on 6 June.
