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RBI Repo Rate: If you too have been waiting for a long time for the EMI of a home loan to be reduced, then RBI has disappointed you again. Today is the last day of the three-day bi-monthly monetary policy review (MPC) which started on 7 October. RBI did not make any change in the repo rate for the tenth consecutive time. The central bank has maintained the repo rate at 6.5 percent. RBI Chief Shaktikanta Das gave information about the decision taken in the MPC. He said that it was decided not to make any change in the repo rate in the MPC. The Reserve Bank last raised the repo rate to 6.5 percent in February 2023.

The Fed Reserve had cut 50 basis points.

After the RBI decided not to change the repo rate, those waiting for cheap home loans, personal loans,, or car loans have again got a shock. Earlier in the month of September, after the Fed Reserve cut the interest rate by 50 basis points, the pressure on RBI to bring down the interest rate had also increased. However, some experts are expecting a cut in the interest rate in the MPC to be held in December.

Expert opinion
Atul Monga, CEO of BASIC Home Loans, said that RBI's decision to keep the repo rate at the old level means that the central bank is being cautious in handling the economy. Due to this, there is a possibility of a change in interest rates in the coming time based on inflation and the performance of the economy. If inflation remains under control and the economy remains stable, then RBI can reduce the repo rate in the coming time. This may reduce the interest rate on home loans along with reducing the EMI till December 2024. After the decision of RBI, it will also have to be noted when the banks and NBFCs give its benefit to the customers.

The central bank holds monetary policy meetings 6 times a year
. This is the third MPC meeting of the financial year 2024-25. In this meeting, the repo rate is reviewed by the Reserve Bank keeping in mind the inflation rate. Before taking any decision on this, RBI keeps in mind many factors like demand, supply, inflation, and credit.

What is the impact on you?
The reduction or increase in repo rate by RBI affects the interest rate of loans given by banks. After the increase in repo rate, banks make all types of loans including home loans, auto loans, and personal loans expensive. In simple words, banks increase the interest rate. But if RBI cuts the repo rate, then it reduces the interest rate of the loan.

What is the repo rate?
The rate at which loans are given to banks by RBI is called the repo rate. Increasing the repo rate means that banks will get loans from RBI at a higher rate. This will increase the interest rate of home loans, car loans and personal loans, etc., which will have a direct impact on your EMI.