Synopsis: The RBI has kept the repo rate unchanged at 5.5%, giving relief to home loan borrowers and a final opportunity for depositors to secure high FD rates. Experts suggest refinancing expensive loans and locking in deposits before rates drop.
RBI Holds Repo Rate at 5.5%: What Borrowers and Depositors Should Do Now
In its latest policy review, the Reserve Bank of India (RBI) decided to maintain the repo rate at 5.5%, offering stability for both borrowers and savers. With inflation cooling to 2.1% in June—well below the RBI’s 4% target—the central bank has chosen a “wait and watch” approach amidst global uncertainties, including upcoming steep U.S. tariffs on Indian imports.
For home loan borrowers, this pause means EMIs will remain stable in the short term. Major banks are already offering sub-8% rates for prime borrowers, especially in balance transfer or refinance deals. For example, a ?60 lakh loan at an 8.5% floating rate over 20 years results in an EMI of around ?52,000—a figure unlikely to rise soon. Borrowers with older, higher-interest loans should consider shifting to repo-linked products for faster transmission of RBI decisions.
For depositors, particularly senior citizens, this could be the last opportunity to lock in elevated returns. Many banks still provide over 7.25% on certain tenures, with an additional 25–50 basis points for seniors. If rate cuts resume later in the year, these attractive FD rates may disappear.
“Today’s rate pause gives borrowers breathing room, and may be the last chance for depositors to lock in high FD rates,” said Adhil Shetty, CEO of BankBazaar.com. He advises locking in FDs now and refinancing loans that are 50 basis points or more above market rates.
The RBI’s cautious stance reflects its intent to protect economic stability while monitoring global and domestic risks. For now, borrowers can breathe easy, and depositors can make the most of this limited-time window before the interest rate cycle turns.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment or borrowing decisions.
