The Reserve Bank of India (RBI) on Tuesday cut the benchmark repo rate by 25 basis points to 6.0%, in a unanimous decision by the Monetary Policy Committee (MPC), and shifted its policy stance from ‘neutral’ to ‘accommodative’. The central bank also lowered its inflation forecast for FY26 by 20 bps to 4.0% and revised its GDP growth projection downward to 6.5%, citing global trade uncertainties.
RBI said the decision reflects its pre-emptive approach to managing macroeconomic risks and is driven by easing inflationary pressures and expected stability in food and crude oil prices. A seasonal correction in vegetable prices and robust kharif arrivals are likely to temper food inflation further.
Mr Piyush Bothra, Co-Founder and CFO, Square Yards, saidm “The RBI’s second consecutive repo rate cut, bringing it down by 25 basis points to 6%, is a timely and encouraging move for the real estate sector. For end-users, the lower rate translates to more affordable EMIs, making home ownership more achievable at a time when property values are inching upward. Moreover, this further strengthens liquidity in the system, enabling developers to secure funding and accelerate new project rollouts. As inflation remains under control, this rate cut could serve as a stabilizing force amid broader global uncertainties, reinforcing stakeholder confidence in residential real estate.”
RBI noted improving rural sentiment, resilient services activity, and supportive government measures aimed at boosting household demand as key tailwinds for growth. The healthy financial position of banks and corporates, along with easing financing conditions, are also expected to support the recovery.
Since February 2025, the central bank has cumulatively reduced policy rates by 50 bps. However, transmission has been uneven. Public sector banks lowered deposit rates by 6 bps, foreign banks by 15 bps, while some private lenders increased them by 2 bps. Nevertheless, the weighted average lending rate (WALR) trends indicate timely transmission across lenders.
Vimal Nadar, Head of Research at Colliers India, said, “In the first MPC meeting of the fiscal 2025-26, RBI has further reduced the repo rate by 25 bps to 6.0%. The change in stance from “neutral” to “accommodative” is indicative of a growth supportive monetary policy and this becomes more critical in the backdrop of heightened uncertainty in global markets following the levy of reciprocals tariffs by the US. Although the intensity and impact of ongoing tariff escalations needs to be fully ascertained, RBI remains optimistic on domestic growth outlook and projects the GDP to grow by 6.5% in the fiscal 2025-26. Recent easing of inflation is likely to increase disposable income which in turn has the potential to boost domestic consumption.”
On the regulatory front, RBI proposed a new market-based framework for securitization of stressed assets, alongside the ARC route under SARFAESI. It also plans to issue comprehensive guidelines for gold loans and expand co-lending norms to include all regulated entities.
Additionally, RBI is reviewing the capital and risk weight norms for partial credit enhancement (PCE) to boost infrastructure financing and deepen bond markets, aligning with recent budgetary announcements.
