Home, auto loans to get cheaper as RBI cuts interest rates to support 'goldilocks' economy
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Dated:- 5-12-2025
PTI
Mumbai, Dec 5 (PTI) Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) on Friday cut key benchmark interest rate for the first time in six months and vowed to provide Rs 1 lakh crore liquidity boost to banking sector to support a “goldilocks” economy in the face of high US tariffs.
The six-member monetary policy committee, led by RBI Governor Sanjay Malhotra, voted unanimously to lower the repurchase or repo rate by 25 basis points to 5.25 per cent and retained a neutral stance, which gave room for further rate cuts.
The step is being seen as lending support to the economy th
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ses to borrow more, and supports economic activity.
The RBI also reiterated its commitment to providing adequate liquidity to the banking system as it announced intent to conduct open market purchases of government bonds up to Rs 1 lakh crore in two tranches of Rs 50,000 crore each on 11th and 18th December and a buy-sell swap of USD 5 billion on 16th December.
Both measures will add durable liquidity at a time when banks face seasonal liquidity pressures.
This is the fourth rate cut by the central bank since February 2025, taking the total to 125 basis points. It held rates in August and October bimonthly monetary policy meetings.
“Inflation at a benign 2.2 per cent and growth at 8.0 per cent in H1:2025-26 (April-September of 2025-
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, the Indian economy has shown remarkable resilience and is poised to register high growth. The headroom provided by the inflation outlook has allowed us to remain growth supportive.” He went on to add that RBI will continue to meet the productive requirements of the economy in a proactive manner while ensuring macroeconomic stability.
Indian exports have plunged after US President Donald Trump slapped a 50 per cent tariff on goods from the country.
RBI will conduct open market operations of Rs 1 lakh crore to buy bonds this month, and another USD 5 billion in forex swaps to add liquidity to the banking system and speed up transmission of lower rates.
Commenting on the RBI decisions, Crisil chief economist Dharmakirti Joshi said the
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