New Delhi: RBI Governor Sanjay Malhotra, while announcing the outcome of the Monetary Policy Committee meeting on Wednesday said that the central bank has decided to keep the repo rate unchanged at 5 per cent. He added that the decision was taken unanimously by all MPC members. This is the second consecutive time that the repo rates have been kept unchanged. This MPC meeting was very crucial as it comes after the additional tariffs imposed by US President Donald Trump on essential commodities. Stock Market Today: Sensex up by 500 pts after RBI holds rate; See where to invest now The Governor said, “The MPC voted unanimously to keep the policy repo rate unchanged at 5.5 per cent. Consequently, the STF rate remains at 5.25 per cent, while the MSF rate and the bank rate remain at 5.75 per cent. The MPC also decided to continue with the neutral stance.” Repo Rate: What it means for the borrowers Since the repo rate remains unchanged- Existing borrowers will not see any change in their EMIs. New borrowers will find loan interest rates holding steady for now. Public and private sector banks are expected to maintain current rates on home, auto, and personal loans, unless they choose to adjust margins individually. [caption id="attachment_160617" align="aligncenter" width="1280"] RBI repo rate announcement[/caption] The interest rate at which the RBI lends to commercial banks is known as repo rate. It was reduced earlier from 6.5% to 5.5% across two cuts and now remains steady as the central bank waits to assess inflation trends and economic recovery. The RBI kept the repo rate steady at 4 percent between May 2020 and April 2022. However RBI gradually increased the policy rates to 6.5 percent maintaining this rate for two years until the recent reductions. Trump imposes 100% tariff on films made outside the US; Global film industry in shock How will this impact on home loans? Banks typically link their lending rates to the repo rate. With the rate unchanged, home loan EMIs are likely to remain stable, offering relief to existing borrowers. New borrowers may not see immediate changes in interest rates unless banks revise their lending spreads. How will this impact personal loans? Personal loans have higher interest rates than home loans, but they also get indirectly affected by the repo rate. With no change in the repo rate, personal loan interest rates are expected to remain steady.
