RBI Slashes Repo Rate by 50 bps to 5.5%: EMIs Set to Drop, Real Estate Gets a Boost

With inflation under control and growth steady, the RBI’s surprise 50 basis points cut offers relief to borrowers, especially homebuyers, and injects fresh optimism into the real estate market.

Mumbai | June 6, 2025 —
In a bold move aimed at sustaining economic momentum, the Reserve Bank of India (RBI) today announced a 50 basis points cut in the repo rate, reducing it to 5.5%. The decision was taken unanimously during the RBI’s three-day Monetary Policy Committee (MPC) meeting held from June 4 to 6, chaired by Governor Sanjay Malhotra.

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This marks the third consecutive rate cut and comes as a welcome relief for borrowers, particularly home loan customers, who can now expect lower EMIs. It also signals a strong pro-growth stance from the central bank amid signs of global economic fragility.

“India’s macro fundamentals remain strong. Inflation is softening, and we see opportunities for faster growth despite a fragile global backdrop,” said Governor Malhotra.

Inflation Eases, Growth Holds Firm

The RBI now projects retail inflation at 3.7% for FY 2025-26, down from its previous estimate of 4%. April inflation data shows a decline to 3.16%, well within the RBI’s comfort range. With core inflation expected to stay benign, the RBI believes it has room to maintain an accommodative monetary policy stance.

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Despite the rate cut, GDP growth forecast remains steady at 6.5% for FY26. The RBI expects a gradual quarterly pickup in economic activity, with estimates ranging from 2.9% in Q1 to 4.4% in Q4.

In another supportive move, the RBI also reduced the Cash Reserve Ratio (CRR) by 100 bps, freeing up ₹2.5 lakh crore in banking system liquidity. Forex reserves currently stand at $691 billion, enough to fund 11 months of imports.

Impact on Real Estate & Borrowers

Industry experts welcomed the move, especially in the real estate sector:

• Vimal Nadar of Colliers India noted that the cut would boost buyer sentiment, drive new housing enquiries, and aid sales conversions.
• Piyush Bothra, co-founder of Square Yards, called it the “right dosage” for the real estate market, adding that it would enhance affordability and spur new launches, especially in low and mid-income segments.

With the cost of borrowing set to decline, banks are likely to adjust lending rates, translating into lower EMIs across personal, home, and auto loans in the coming months.

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RBI, Repo Rate Cut, Sanjay Malhotra, EMI Relief, RBI MPC June 2025, Inflation in India, Real Estate Market, Home Loans, CRR Cut, Indian Economy, RBI Policy Announcement