The Reserve Bank of India (RBI) is set to hold its next monetary policy meeting from February 4 to 6, 2026.
Economists are predicting a 0.25% cut in the repo rate, as the economy reaches a critical point.
The RBI faces a tough task: balancing inflation control with economic growth.
Currently, the central bank is focused on increasing liquidity to encourage consumer spending and investment.
If the repo rate is reduced, it could drop to 5.25%, making borrowing cheaper for individuals and businesses.
Big Savings for Home Loan Borrowers
A repo rate cut directly affects home loans.
For example, on a 20-year loan of ₹50 lakh at 9% interest, a 0.25% reduction in the repo rate could:
Lower the interest rate to 8.75%
Save around ₹800 per month on EMIs
Result in total interest savings of ₹1.9 lakh over the loan tenure
Borrowers can either reduce their EMI or keep it the same and shorten the loan term by 10–12 months.
This strategy could lead to overall savings of over ₹4 lakh.
Will the Rate Actually Be Cut?
Not everyone agrees that a rate cut will happen.
Crisil, a leading rating agency, warns that rising inflation may prevent the RBI from lowering rates in the upcoming review.
Their report states: “Given the rise in inflation, we expect the RBI to keep policy rates unchanged for the time being.”
Repo Rate Changes in 2025
In 2025, the Monetary Policy Committee (MPC) reduced the repo rate by 125 basis points:
February: 25 bps
April: 25 bps
June: 50 bps
December: 25 bps
The repo rate remained unchanged in August and October.
This shows that while the RBI is willing to cut rates to support growth, inflation remains a key concern.