The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25 percent in the second bi-monthly monetary policy review for the new financial year 2026-27. Announcing the decisions of the Monetary Policy Committee (MPC) on Friday, June 5, RBI Governor Sanjay Malhotra said that the committee has unanimously decided not to make any change in the key policy interest rate. After this decision, there will be no increase in EMI of home loan, car loan and other floating rate loans at present. This has provided relief to lakhs of loan holders.
No change in rates for the second consecutive time
Earlier, in the monetary policy review of April 2026, RBI had also kept the repo rate constant at 5.25 percent. The central bank believes that in view of the current global circumstances, rising crude oil prices and ongoing tensions in West Asia, it is necessary to adopt a cautious approach. The MPC has also maintained its ‘neutral’ policy stance along with the repo rate, indicating that the RBI will keep an eye on both inflation and economic growth in the coming months.
What is repo rate?
Repo rate is the interest rate at which RBI provides short-term loans to commercial banks. When the central bank reduces the repo rate, it becomes cheaper for banks to take loans and they can provide loans to common customers at lower interest rates. At the same time, when the repo rate increases, loans become expensive and there is a possibility of EMI increasing.
Why did RBI not change the interest rate?
According to RBI, risks related to ongoing geopolitical tensions in West Asia, rising energy prices, weakening rupee and inflation still remain. In view of these circumstances, the Central Bank has decided not to make any change in the interest rates. Also, RBI has increased the inflation estimate for the current financial year and made some cuts in the economic growth rate estimate.
What will be the impact on common people?
EMI of home loan and other floating rate loans will not increase at present. New borrowers will not face immediate changes in interest rates. There is less possibility of major changes in the interest rates of fixed deposits (FD) and savings schemes at present. Markets and investors will now keep an eye on the next monetary policy review of RBI.
This decision of RBI is being seen as an attempt to maintain economic stability and strike a balance between increasing global uncertainties. At present, this decision is considered a relief for the loan holders.