RBI Pauses Rate Cuts, Retains Interest Rate At 5.25%
The rate cut pause comes on the back of the CPI-based headline retail inflation ruling below the 2 per cent lower band mandated by the government for the last four months
For home loan borrowers, the status quo means no immediate change in Equated Monthly Instalments (EMIs), especially for loans linked to external benchmarks such as the repo rate. Banks are unlikely to revise home loan interest rates in the near term unless the central bank changes its policy stance or liquidity conditions.
Speaking to reporters at the post-monetary policy press conference, RBI Governor Sanjay Malhotra said that key policy rates will remain at low levels for a long period and may go down even further. He noted that policy transmission on the deposit side has been slower and that interest rates on fixed deposits will decline.
Since February last year, the Monetary Policy Committee (MPC) of the RBI has reduced the repo rate by 125 basis points.
Responding to a question from FC, Malhotra said that the impact of recent trade deals signed by India, along with other factors, could add up to 20 basis points to the country's GDP growth.
The forecast for FY26 inflation was raised by 10 basis points (bps) to 2.1 per cent from 2 per cent earlier, while the GDP estimate was also revised higher to 7.40 per cent for FY26 from 7.30 per cent earlier. Given that the new series for both GDP and CPI will be released later this month, the MPC refrained from giving full-year projections for FY27.
Malhotra said the central bank would continue to supply currency notes to meet the country’s demand. The total value of currency notes in circulation stood at ₹36.87 lakh crore at the end of March 2025, compared to ₹34.78 lakh crore a year earlier. In volume terms, the number of banknotes increased to 15,500 crore pieces from 14,600 crore.
During 2024-25, the value and volume of banknotes in circulation rose by 6.0 per cent and 5.6 per cent, respectively.
Responding to a question on the availability of small-value currency notes, Malhotra said, “We are very conscious of the need for currency. We provide all denominations, whether lower or higher.”
