Repo Rate Cut to 6.25%: How Real Estate Industry Experts View RBI’s Move?

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points (bps) from 6.50% to 6.25%. This is the first rate cut in five years and the first under Governor Sanjay Malhotra. The Monetary Policy Committee (MPC) unanimously decided on the reduction, reflecting a shift in policy amid changing economic conditions.

The decision comes amid global economic challenges. The U.S. government has introduced new tariffs on China, Canada, and Mexico, raising concerns about trade disruptions. Inflation in advanced economies remains high, delaying expected rate cuts by central banks. A stronger U.S. dollar has also led to capital outflows from emerging markets, including India.

The RBI has adjusted its growth projections for FY26. Q1 GDP growth has been revised from 6.9% to 6.7%, while Q2 growth is now estimated at 7% instead of 7.3%. Projections for Q3 and Q4 remain at 6.5%. On inflation, Q4 FY25 has been revised from 4.5% to 4.4%, and Q1 FY26 is now projected at 4.5% instead of 4.6%. Estimates for Q2, Q3, and Q4 FY26 stand at 4%, 3.8%, and 4.2%, respectively.

The rate cut is expected to reduce borrowing costs for businesses and consumers, supporting credit growth and investment.  With inflation aligning closer to the 4% target, the RBI has adjusted its policy while monitoring economic trends. Further rate changes will depend on evolving conditions.

The awaited RBI MPC meeting announcement has arrived. The committee has announced a 25 basis point reduction to 6.25%. For homebuyers, it is a positive news, making it a lenient approach on the part of the committee. The reduction will make home loans and EMIs affordable. Homebuyers can also go for floating rate loans for more affordable housing."