RBI Repo Rate Remains Unchanged at 5.25%; No Effect on Home Loan Floating Rate

RBI has kept the Repo Rate unchanged at 5.25% to maintain a neutral stance. The decision comes after a 3-day-long meeting of the RBI’s Monetary Policy Committee (MPC). RBI Governor Sanjay Malhotra said the MPC voted unanimously to keep the policy repo rate unchanged. The neutral stance reflects the RBI’s economically growth-oriented approach in the wake of easing inflation, steady economic growth, and a stable external sector. It also remains in line with market expectations and gives a big relief to home loan borrowers – old and new.

For home loan borrowers, the unchanged repo rate means they won’t have any negative or positive impact on their EMI; it is likely to remain the same. Similarly, the other loan borrowers will also have no impact on their EMI.

Why RBI Repo Rate Impacts Floating Interest Rate?

With the RBI keeping the repo rate unchanged on 4 consecutive occasions, many home loan borrowers are curious how it will impact their home loan interest rate and EMI. The answer is that there will be no impact on their home loan EMI and interest rate.

The RBI repo rate is directly linked with home loan floating interest rates, with interest rates going up if the repo rate increases and vice versa. Essentially, the repo rate is the rate at which the RBI lends money to the banks. So, if the cost of borrowing increases for banks, it tends to have the same effect on borrowers.

Why RBI Keep the Repo Rate Unchanged?

RBI keeps the repo rate unchanged by considering many things. They are –

1. Since the inflation rate isn’t slowing down enough, food and fuel prices are going up. To ensure that loan borrowers and credit card users don’t feel added pressure of an increased repo rate, the RBI has kept the repo rate the same as the last time. 
2. The unchanged Repo Rate also protects the growth rate and ensures a watchful eye on the uncertain future of geopolitics. It’s a preventive measure to ensure that markets don’t go into shock all of a sudden and stop borrowing from banks. 

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