RBI Cuts Repo Rate by 50 Basis Points to 5.50%, Signals Growth Push Amid Cooling Inflation

In a significant move to support economic growth, the Reserve Bank of India (RBI) slashed the repo rate by 50 basis points to 5.50 percent. This marks the first rate cut in over a year and comes as inflation shows signs of easing and GDP growth projections remain stable.

RBI Governor Sanjay Malhotra, announcing the decision after the three-day Monetary Policy Committee (MPC) meeting, said the stance remains “accommodative” with a continued focus on managing inflation while facilitating growth. The cut is expected to boost consumer sentiment and lending activity, particularly in interest-sensitive sectors like real estate, automobiles, and infrastructure.

Real Estate Sector Reaction

With home loan rates expected to come down, the move is likely to rejuvenate housing demand, especially in the mid and premium segments. Developers and investors see this as a positive step toward improving market liquidity and buyer sentiment.

Also Read: RBI Expected to Declare Another Repo Rate Cut in June MPC Meet, Say Experts

Manish Jaiswal, CEO, Eldeco Group highlighted “The RBI’s 50 basis point repo rate cut to 5.5 percent is a welcome step towards revitalizing the real estate sector, especially at a time when the industry is navigating evolving market dynamics. Beyond the immediate benefit of reduced borrowing costs, this move signals the regulator’s confidence in growth revival, which is critical for developers focused on delivering long-term value rather than short-term gains. At Eldeco, we see this as an opportunity to strategically optimize our project timelines and financial planning, ensuring that customers for timely possession and enhanced quality. Such monetary easing will help restore market balance and invigorate demand sustainably.”

The repo rate cut is also seen as a timely intervention in the backdrop of global uncertainties, where easing borrowing costs can help shield domestic markets from external volatility. Experts believe this move gives a strong signal of policy support at a time when demand consolidation is key.

Lending Rates & Banking Sector Outlook

With the policy rate now at 5.50 percent, banks are expected to gradually lower their lending and deposit rates. While the transmission may be staggered, the RBI’s emphasis on liquidity management and monetary easing is expected to bring relief to both retail and corporate borrowers.

Malhotra underlined that the central bank will continue to monitor inflation dynamics closely while ensuring adequate support for sectors critical to economic recovery.

Yateesh Wahaal, Director, M3M India, "The RBI’s decision to reduce the repo rate by 50 basis points to 5.5 percent is a timely and growth-oriented measure. This move is expected to ease borrowing costs, improve liquidity, and revive overall market sentiment. For the real estate sector, lower interest rates will provide a significant boost to end-user confidence and encourage fresh investment across key markets. It reflects the RBI’s intent to support economic momentum and long-term capital deployment. At M3M India, we believe this monetary easing will translate into greater buyer activity and strengthen the foundation for sustained sectoral growth. The move is aligned with the broader vision of building a robust, future-ready economy driven by real estate and infrastructure."

Way Ahead

Economists suggest that if inflation continues on a downward trend, further rate adjustments could be on the table later in the fiscal year. For now, the RBI’s move is being viewed as a strong pro-growth signal that balances price stability with the need to sustain the recovery momentum.