RBI Slashes Repo Rate by 50 bps to 5.5% – What It Means for Borrowers & Real Estate

In a move that brings welcome relief to borrowers and the real estate sector, the Reserve Bank of India (RBI) has reduced the repo rate by 50 basis points, bringing it down to 5.5%. This decision was announced after the Monetary Policy Committee (MPC) meeting held from June 4 to 6, by RBI Governor.

This brings relief to borrowers, as it could lead to reduced EMIs on long-term loans—particularly benefiting those planning to buy property.

Indian Economy Shows Resilience Amid Global Uncertainty

Governor Malhotra noted that while the global economy remains uncertain and trade outlooks have been revised downward, India’s economic fundamentals remain strong.

“India’s strength lies in the robust balance sheets across five major sectors. The country continues to offer lucrative opportunities to both domestic and foreign investors,”
— said RBI Governor.

He also emphasized that the Indian economy is not just growing but has the potential to accelerate further.

Inflation Forecasts Improve; Positive Outlook Ahead

The RBI has revised its retail inflation forecast for the current financial year to 3.7%, down from the earlier estimate of 4%. Government data supports this, showing a drop in inflation to 3.16% in April, compared to 3.34% in March—well within the RBI’s targeted range.

Consumption, Industrial Growth, and Urban Demand on the Rise

The RBI Governor highlighted continued strength across various economic indicators:

1. Discretionary spending and private consumption are increasing steadily
2. Industrial activity is recovering
3. The services sector remains strong
4. Urban demand is improving, while rural demand holds steady

These positive trends indicate a broad-based economic recovery.

GDP Growth Projection Remains at 6.5%

Despite global headwinds, the RBI has maintained its GDP growth forecast at 6.5% for FY25. The projected growth by quarter is:

1. Q1 (Apr–Jun): 2.9%
2. Q2 (Jul–Sep): 3.4%
3. Q3 (Oct–Dec): 3.9%
4. Q4 (Jan–Mar): 4.4%

CRR Reduced; Liquidity Boost Expected

The central bank also cut the Cash Reserve Ratio (CRR) by 100 basis points, unlocking 2.5 lakh crore in bank liquidity. This move is expected to improve credit flow to key sectors, including real estate and infrastructure.

Forex Reserves Strong; India Remains a Key Investment Hub

India’s foreign exchange reserves currently stand at a robust $691 billion, enough to cover over 11 months of imports, further strengthening investor confidence. Governor Malhotra reaffirmed India's position as a top investment destination.

Conclusion

The RBI’s decisive move to reduce the repo rate signals a pro-growth, pro-consumer stance, especially benefiting the real estate sector. As inflation stays under control and demand across sectors strengthens, India seems well-positioned for a stable and optimistic economic trajectory.

By LNN (Liyaans News Network)