Mumbai, 5 DecemberThe Reserve Bank of India (RBI) on Friday made the big announcement for which crores of borrowers were waiting, This is a big gift for the consumers hoping for relief in EMI amid rising inflation, After the three-day meeting of the Monetary Policy Committee (MPC), RBI Governor Sanjay Malhotra announced to reduce the repo rate by 0,25% to 5,25%, With this, the way has been cleared for reduction in EMI of house, car and personal loan,
Sanjay Malhotra said that MPC conducted a complete investigation of the situation from 3 to 5 December. Considering the situation of interest rates in the country, the economic environment in the world, the purchasing demand of the people and the continuously falling inflation, all the members together decided to reduce the repo rate. At present, India’s economy is in good shape. GDP grew by 8.2% in the second quarter and retail inflation came down to just 0.25% in October 2025, which is the lowest level ever. For this reason RBI had a good opportunity to reduce the interest rate.
Loans will be cheaper
The reduction in repo rate will have a direct impact on the loans of banks. Banks will now borrow money from RBI at lower interest rates, the benefits of which will reach the consumers. Home loan EMI will be less, auto loan will be cheaper and relief in interest rates is possible on personal loan also. After the festive season, this step can provide great relief to the pockets of consumers.
Announcement to increase liquidity
RBI not only cut the repo rate, but also took several steps to increase liquidity in the market, such as-
STF (Standing Deposit Facility) rate reduced to 5%
MSF (Marginal Standing Facility) and Bank Rate 5.5%
OMO purchase of government bonds worth Rs 1 lakh crore
$5 billion three-year dollar-rupee buy-sell swap
These steps are aimed at increasing Yuvel liquidity in the system and maintaining growth momentum.
Neutral stance continued
MPC announced to continue its neutral stance in monetary policy. This means that in the future policies, RBI will keep the balance of inflation and growth as priority.
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