RBI Decides to Keep Loan EMI Unchanged

In Brief

• No change in repo rate by RBI MPC

• Five out of six RBI members voted for a rate cut

• What exactly is the repo rate?

In a surprise to the general public, the RBI MPC has decided not to make any changes to the repo rate. This means that the EMI (Loan EMI) for home loans and other retail loans will remain the same. This is the second consecutive time that the RBI has not made any changes to the interest rates. Five out of six members of the RBI voted against reducing the repo rate. Currently, the RBI's repo rate is 5.50 percent. Previously, in August, the RBI had not made any changes to the policy rate. However, this time many economists expected that the RBI would surprise everyone by reducing the repo rate by 0.25 percent. However, the decision has been made to keep the repo rate unchanged in the meeting.

The inflation forecast for the current fiscal year has been reduced by 0.50 percent, bringing the national inflation estimate to 2.6 percent. In the August meeting, the estimate was set at 3.1 percent, which is lower than the previous 3.7 percent. This means that the RBI is continuously reducing the inflation forecast. In addition to keeping the repo rate stable, the RBI has maintained the SDF rate at 5.25% and the MSF rate at 5.75%. Sanjay Malhotra also mentioned that all six members of the MPC voted in favor of keeping the repo rate unchanged.

What exactly is the repo rate?

The repo rate is a rate at which banks get short-term loans from the RBI. Banks provide loans to customers using this money. If the repo rate decreases, banks get cheaper loans. This also provides relief to customers. Based on this rate, EMIs on home loans, vehicle loans, and other loans become cheaper or more expensive.