RBI cuts Repo Rate to 6%: What it means for individuals and families

In a move that could bring relief to the common man, the Reserve Bank of India (RBI) has now further lowered the repo rate by 25 basis. This means that the repo rate is reduced from 6.25% to 6%. This is the second consecutive rate cut, following a similar reduction in February 2025. This announcement was made by RBI Governor Sanjay Malhotra after the first Monetary Policy Committee (MPC) meeting of FY26, which was held from April 7 to 9. But what does this mean for the common man, which includes individuals and families? And how would it affect their lives? Read on to know more:
What is Repo Rate?
For the unversed, the repo rate is the interest rate at which the RBI lends money to commercial banks for short-term needs. And so, when the repo rate drops, the borrowing becomes cheaper for banks— and subsequently, for the common man too.
Why is the Repo Rate reduced by the RBI?
The RBI controls inflation and manages liquidity in the economy by reducing the Repo Rate. This encourage people to take more loans, and spend money when inflation is under control. Reports suggest that for FY26, the inflation is expected to stay around 4%, which is well within the RBI's comfort zone of 2–6%.
Another reason behind the rate cut is the global uncertainty caused by rising trade tensions, especially after U.S. President announced the new Reciprocal Tariffs a few days ago. These developments could slow down global growth and affect India’s exports—and so, the RBI has now acted proactively to keep inflation in check.
How would the the Repo Rate cute affects individuals and families
1. Loans and EMIs could get cheaper
A lower repo rate means banks can borrow money more cheaply from the RBI. This could lead to lower interest rates on home, auto, and personal loans— thus making EMIs lighter on your pocket. However, how soon this happens depends on your bank and how quickly it passes on the benefit.
2. Lower returns on Fixed Deposits (FDs)
While borrowers benefit, FD investors may feel the pinch. As lending rates drop, banks often reduce FD interest rates too. If you’re planning to invest in FDs, now might be a good time— before banks reduce the FD rates.
3. Taking personal loan could get cheaper
If you already have a fixed-rate personal loan, your EMIs won’t change. But if you’re planning to take a new one, this rate cut could make it more affordable.
India’s growth outlook
RBI Governor Sanjay Malhotra is positive about India's economy, projecting the GDP growth at 6.5% for FY26. Here's the quarterly breakdown, as per reports:
Q1: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%
He also highlighted positive signs in the agriculture, manufacturing, and services sectors, thanks to strong crop output, better water reservoir levels, and growing urban consumption. Investment activity is also on the rise, supported by healthy corporate balance sheets and ongoing infrastructure push by the government.