By buld_online 
The Reserve Bank of India on Friday cut the repo rate by 50 basis points to 5.5% and shifted its monetary policy stance from ‘Accommodative’ to ‘Neutral’, delivering a mixed bag for borrowers and savers across the country.
The sharp rate cut, announced by RBI Governor Sanjay Malhotra after the Monetary Policy Committee meeting in Mumbai, aims to ease borrowing costs amid a favorable inflation outlook. CPI inflation for FY26 was revised down to 3.7% from 4% earlier, giving the central bank leeway to act.
For home loan borrowers, the move is good news. Those with loans linked to the External Benchmark Lending Rate (EBLR) will see interest rates fall in the next reset cycle. The impact could be immediate for many. A 50 bps cut translates to significant monthly savings—on a ₹1 crore home loan over 20 years, the EMI could drop by about ₹3,000. Alternatively, borrowers can keep their EMIs unchanged and opt to reduce their loan tenure, potentially saving lakhs in interest over the life of the loan.
Malhotra emphasized that “lower lending rates will help revive household demand and spur credit growth,” as the central bank looks to support consumption without risking inflation.
But while borrowers benefit, savers are set to lose. Banks are expected to lower fixed deposit (FD) interest rates in line with the repo cut. Short- and medium-term FDs are likely to see the steepest drops. For example, if a 1-year FD rate falls from 7% to 6.5%, a ₹10 lakh deposit would earn ₹5,000 less annually.
Existing FDs remain unaffected until maturity, but reinvestment at lower rates will hit returns. Senior citizens, who earn an extra 0.25–0.5% on FDs, will still feel the pinch despite the cushion. Financial advisors recommend locking in current FD rates or exploring alternatives like debt mutual funds or government bonds.
The RBI’s change in stance to ‘Neutral’ signals caution—it gives the central bank the flexibility to respond to global risks or domestic shifts in inflation and growth.