Core Viewpoint - The Reserve Bank of India (RBI) has cut the repo rate by 25 basis points from 5.5% to 5.25%, encouraging banks to reduce their lending rates, particularly for long-term loans like home loans [1] Summary by Category Monetary Policy Impact - The repo rate cut is expected to influence banks to lower their lending rates, especially for home loans linked to the external benchmark [1] - Loans linked to MCLR may not see a proportional reduction, as a 25 basis point cut could result in only a 10 basis point decrease in some cases [2] Home Loan Interest Rates by Banks - **HDFC Bank**: Current rates are 7.90% to 13.20%, expected to adjust to 7.65% to 12.95% after the repo rate cut [3] - **ICICI Bank**: The external benchmark lending rate (EBLR) is currently 9.20%, with new rates likely to be lower; current interest rates range from 8.75% to 9.80% [3] - **Kotak Mahindra Bank**: Home loan rates are 7.99% to 12% for salaried individuals and 7.99% to 13.30% for self-employed individuals [4] - **Axis Bank**: Charges 8.35% to 9.10% for borrowers with a Cibil Score of 751 and above, and 8.60% to 9.35% for those below 750 [4] State Bank Interest Rates - **State Bank of India (SBI)**: Current home loan rates are 7.5% to 8.7%, based on an EBLR of 8.15% [6] - **Union Bank of India**: Home loan rates range from 7.45% to 10%, based on an EBLR of 8.25% [6] - **Canara Bank**: Charges interest rates from 7.40% to 10.25%, with an EBLR of 8.25% [6] Summary of Interest Rates - A table summarizing the interest rates charged by various banks shows the range of rates applicable based on the repo rate of 5.5% [5]

The monetary policy committee has now lowered the repo rate by a cumulative 125 basis points since February to 5.25%. It kept rates unchanged in August and October.At 9:46 AM, before the policy announcement, the Nifty Bank index was at 59,349.05, up 0.10%. Nifty Auto stood at 27,764.00, up 0.11%, while Nifty Realty was at 892.45, up 0.26%.Following the policy decision after 10 AM, Nifty Bank rose 0.6% to 59,658.65. Nifty Auto advanced 0.4% to 27,850.25, and Nifty Realty gained 1% to 899.05.Financial stocks ...

Core Viewpoint - Economists advocate for a repo rate cut by the Reserve Bank of India (RBI) in December, citing record low consumer inflation and the potential for economic growth without significant inflation impact [10][11]. Economic Growth and Inflation Projections - Asia's No. 2 economy is expected to grow between 6.8% to 7% this fiscal year, with consumer inflation projected at 1.8% to 2% [10]. - For FY27, GDP growth is estimated to be between 6.5% to 7%, while inflation is anticipated to be in the range of 3.5% to 4% [2][10]. Policy Considerations - The RBI is likely to revise its inflation forecasts downwards and growth forecasts upwards due to the record low inflation of 0.25% in October, influenced by falling food prices and GST rationalization [6][11]. - The uncertainty surrounding a pending trade agreement with the US adds complexity to the RBI's policy decisions [8][11]. Empirical Evidence and Economic Advisory - Empirical evidence suggests that the costs of missed easing cycles are more detrimental than the costs associated with early easing, indicating that a rate cut now would minimize expected losses [3][10]. - Economists attending pre-policy consultations expressed that a rate cut would enhance growth without significantly affecting inflation [11].