RBI cut repo rate up to 6%: What does it mean to individuals and families

The common man can bring relief, which has now reduced the repo rate by the Reserve Bank of India (RBI) on 25 basis. This means that the repo rate decreases by 6.25%. It is a second consecutive rate cut after a similar decrease in February 2025. The announcement was made by RBI Governor Sanjay Malhotra after a meeting of FY26’s first monetary policy committee (MPC) meeting, which was made from 7 to 9 April. But what does it mean to the common man, which includes individuals and families? And how will it affect their life? Read on to know more:
What is the repo rate?
For unaffected, the repo rate is the interest rate on which RBI lends money to commercial banks for short -term needs. And so, when the repo rate falls, the borrowed becomes cheaper for banks- and later, also for the common man.
Why does RBI reduce the repo rate?
RBI controls inflation and manages liquidity in the economy by reducing the repo rate. It encourages people to take more loans, and spends money when inflation is under control. Reports suggest that for FY 26, the inflation is expected to be around 4%, which is well within the RBI’s 2–6%comfort area.
Another reason behind the rate cut is that there is global uncertainty due to growing trade stress, especially after the announcement of new mutual tariffs a few days ago. These development can slow down global growth and affect India’s exports – and therefore, the RBI has now worked continuously to keep inflation under investigation.
How will repo rate affect cute persons and families
1. Loans and EMIs can be cheaper
A low repo rate means that banks can borrow money cheaply than RBI. This can lead to a low interest rate on home, auto and personal loans – thus EMI on your pocket can be made lighter. However, how quickly it happens depends on your bank and how quickly it passes on profit.
2. Low return on fixed deposits (FD)
While borrowers benefit, FD investors may feel a pinch. As such borrowings fall, banks often reduce FD interest rates. If you are planning to invest in FDS, now there may be a good time- before banks reduced FD rates.
3. Taking personal loan can be cheaper
If you already have a certain-rate personal loan, your EMI will not change. But if you are planning to take a new one, then this rate cut can make it more cheap.
India’s development approach
RBI governor Sanjay Malhotra is positive about India’s economy, offering GDP growth for FY 26 at 6.5%. According to the report, the quarterly breakdown here:
Q1: 6.5%
Q2: 6.7%
Q3: 6.6%
Q4: 6.3%
He also highlighted positive signals in agriculture, manufacturing and service sectors, thanks to strong crop production, better water reservoir levels and increasing urban consumption. Investment activity is also increasing, supported by a healthy corporate balance sheet and pushing the ongoing infrastructure by the government.