The Reserve Bank of India’s Monetary Policy Committee voted 5-1 to cut the repo rate by 25 basis points to 5.75%, marking the second consecutive cut in 2025 as inflation eases to a 3-year low.
Sector Impact Analysis
Real Estate: Lower borrowing costs typically boost housing demand, particularly in the affordable segment. Developers with large unsold inventories are positioned to benefit.
Auto: EMI reductions on vehicle loans could accelerate both passenger vehicle and two-wheeler sales, which had shown softness in early 2025.
Banking: While NIMs face short-term pressure, the rate cut should stimulate loan growth, particularly in retail and MSME segments.
Macro Outlook
With CPI inflation at 4.1% and GDP growth projected at 7.2% for FY26, the RBI has room for one more 25bps cut later in the year, barring global commodity shocks.