India's RBI Takes Action: Repo Rate Cut Sparks Hope for Homebuyers and Economic Growth

RBI Cuts Repo Rate for the First Time in Five Years

Reserve Bank of India's Monetary Policy Committee decided to reduce the repo rate by 25 basis points to 6.25%. This is the first cut in nearly five years and was decided under the new Governor Sanjay Malhotra. Earlier, it was held constant at 6.50% for eleven consecutive meetings. Additionally, the Standing Deposit Facility (SDF) rate has been reduced to 6.0%, and the Marginal Standing Facility (MSF) and Bank Rate has been lowered to 6.5%.

Historical Context of the Last Rate Cut

The RBI had last cut the repo rate in May 2020 and set it at 4% for reviving the economy during post-COVID-19. These cuts in the repo rate are to see downward movements in borrowings by the homebuyer, thus making equated monthly installments cheaper for him.

GDP Growth Projection Amid Rate Cut

MPC said India's FY26 GDP growth would be 6.7%. Experts opined that with this rate cut, loans would be cheaper, and overall economic growth would also get a push, and there is even talk of more cuts in the subsequent meetings. Right after the declaration, the rupee recovered 16 paise against the US dollar and closed at 87.43.

Impact on Homebuyers and the Housing Market

Deciding factors in the move were a decline in inflation and the low price of basic vegetables. MPC adopted a 'neutral' stand which gave it a chance to gauge new data about the economy. For homebuyers, this cut at 25 basis points will be huge in saving for the loan tenure. The real estate market is said to experience this, increasing demand and thus buoying the spirits of homebuyers.

Technicals-

Major resistance- 88

Near-term resistance - 87.65

Minor support-  87.25,86.65

Trend reversal level- 85