In a widely anticipated move, the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points, bringing it down to 6%. This decision by the Monetary Policy Committee (MPC) reflects the central bank’s accommodative stance aimed at boosting economic growth amid global uncertainties and softening inflation. Here’s a breakdown of what this means and how different industry experts are reacting, especially in the real estate and financial markets.
What is the Repo Rate and Why Does it Matter?
The repo rate is the interest rate at which the RBI lends money to commercial banks. A reduction in this rate typically signals lower borrowing costs for banks, which then pass on these benefits to consumers in the form of reduced loan interest rates. This stimulates spending and investment—key levers for economic revival.
Real Estate Sector applauded the decision
The rate cut is seen as a significant boost for the real estate sector, which is highly sensitive to interest rate changes.
Prashant Sharma, President of NAREDCO Maharashtra, called the move “timely” and “essential” for boosting consumption and investment cycles. He believes this will directly enhance liquidity for developers and affordability for buyers, especially in the affordable housing space.
Shiv Garg, Director, Forteasia Realty Pvt. Ltd., welcomed the move, stating that “it makes homebuying more affordable” and will likely fuel demand in both urban and rural areas. He also acknowledged that government infrastructure spending and sectoral growth in manufacturing and services could further amplify this demand.
Anurag Goel, Director of Goel Ganga Developments, highlighted how the cut improves “housing finance affordability,” especially for EMI-dependent homebuyers. He believes this will enhance buyer sentiment, particularly in Tier 1 and 2 cities, while also spurring developers to plan new launches.
LC Mittal, Director at Motia Group, noted that this move will not only lower EMIs but also “rejuvenate market sentiment,” especially for ready-to-move-in and under-construction properties. He emphasized its importance in revitalizing the affordable and mid-income housing segment—considered the backbone of India’s real estate growth.
Shraddha Kedia-Agarwal, Director at Transcon Developers, underlined how the rate cut will support buyer sentiment in high-ticket-size markets. “It’s a catalyst for end-user-driven demand and will accelerate decision-making,” she added.
Impact on Fixed Deposits and Investment Strategies
While borrowers cheer lower interest rates, FD investors need to realign strategies.
Aman Gupta, Director of RPS Group, sees the repo rate cut as a wake-up call for FD holders relying on passive strategies. He suggests investors consider small finance banks that offer better rates, investigate tax-efficient instruments like Senior Citizen Saving Schemes (SCSS), and diversify into hybrid mutual funds. “Don’t rush into high-risk assets—build an emergency fund and stay alert to policy changes,” he advised.
Siddharth Maurya, MD of Vibhavangal Anukulakara Pvt. Ltd., urges investors to lock in current FD rates through longer tenures and explore alternatives like debt mutual funds and RBI floating rate bonds. He also advocates for FD laddering and active renewal management to avoid reinvestment at lower rates.
Stock Market Reaction: Muted, But Long-Term Outlook Stable
G Chokkalingam, Founder of Equinomics Research, noted that the 25-bps cut is unlikely to trigger a market rally due to prevailing global uncertainties such as trade wars and weak earnings. However, he emphasized that factors like low inflation and a strong agricultural outlook justify continued easing.
Deven Choksey, another market strategist, argued that a 50-bps cut could have had a stronger impact. He highlighted that interest rate cuts usually span 6–8 quarters, suggesting there may be more rate reductions in the pipeline. “This is a good market to buy into,” he said, urging investors not to stay on the sidelines.
Growth & Inflation Outlook: A Mixed Bag
In its policy announcement, the RBI revised India’s GDP growth forecast for FY26 downward to 6.5%, citing uncertainties in global trade and policy dynamics. However, the RBI struck a more optimistic tone on inflation. Retail inflation eased to 3.61%, its lowest in seven months, and the forecast for FY26 has been revised down to 4%, assuming a normal monsoon and record rabi and kharif crop output.
RBI Governor Sanjay Malhotra believes a durable softening of food prices is likely, although he cautioned about global weather and trade-related risks.
