The Reserve Bank of India (RBI) is going to take an important decision on the repo rate next week, which can directly affect the interest rates of personal loan, home loan and car loan. Experts believe that the RBI can cut the repo rate, which will make it easier for banks to give loans and consumers will also get the benefit of getting loans at low interest rates.
Possibility of cut in repo rate
In February this year, the RBI Monetary Policy Committee reduced the repo rate from 0.25 percent to 6.25 percent, which was the first cut in the last 5 years. According to the latest Citibank estimates, the RBI may cut the rates by 0.25 per cent in its next meeting to be held from April 7 to 9. In addition, Bank of America Global Research estimates that by the end of 2025 the repo rate can reach 5.5 per cent. This means that there may be a total of 1 per cent (100 basis points) this year, including a 0.25 per cent cut in February.
What is the repo rate?
The repo rate is the rate at which the RBI provides short -term loans to commercial banks in exchange for government securities. Currently this rate is 6.25 percent. If the repo rate decreases, banks get funds at low cost, which they provide loans at low interest rates and deliver it to the customers.
What will be the benefit of customers?
The repo rate plays a major role in the cost at which banks get money. If the repo rate is high then the cost of banks increases and if it is low then the cost decreases. If the RBI cuts the repo rate, banks will be able to provide cheap loans. This will reduce the EMI of home loan, car loan and personal loan, which will be a big relief for customers.
expert opinion
According to experts, given the low inflation and controlled value pressure, RBI has sufficient scope to cut the repo rate. If this deduction occurs, there will be significant relief in loan interest rates, which will also boost economic growth. The market will be eyeing the upcoming decision, as it will have a profound impact on the banking sector as well as the loan customers.
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