Punjab Newsline | New Delhi

Reserve Bank of India (RBI) has kept the repo rate unchanged at 5.25%, meaning home, car and personal loans linked to the repo rate will neither become cheaper nor see any change in their EMIs for now.

The decision was announced by RBI Governor Sanjay Malhotra on August 5 after the conclusion of the three-day meeting of the Monetary Policy Committee (MPC).

Malhotra said the central bank decided to maintain the current interest rate in view of the ongoing volatility in international financial markets and rising inflationary pressures.

No Change in EMIs

Since the repo rate remains at 5.25%, borrowers whose loans are directly linked to the repo rate will continue to pay the same EMI and interest rate for the time being.

New Loans to Continue at Existing Rates

Banks are not expected to make any immediate changes to interest rates on home, car and personal loans. New borrowers are also likely to get loans at the current prevailing rates.

FD Rates Likely to Stay Stable

The RBI’s decision to keep the repo rate unchanged also means that fixed deposit (FD) interest rates are unlikely to change immediately. However, the final decision on deposit rates will depend on individual banks and their funding requirements.

Banks May Still Make Limited Adjustments

The RBI clarified that an unchanged repo rate does not necessarily mean all banks will keep their lending and deposit rates exactly the same. Banks may make limited adjustments based on funding costs, deposit growth and market conditions.

Third MPC Meeting of the Financial Year

The RBI had also kept the repo rate unchanged at 5.25% during its June policy review, which was the second MPC meeting of the current financial year. The latest review was the third meeting, while the first was held in April. A total of six MPC meetings are scheduled for this financial year.

Analysts Expect RBI to Remain Cautious

Maulik Patel, Head of Research at Equirus Securities, said that with monetary policies tightening across major global economies, the RBI is expected to remain cautious in its upcoming decisions.

He added that the central bank could consider a 25 basis point increase in the December policy review, depending on global economic conditions and inflation trends.