The RBI’s decision to cut the repo rate for the fifth consecutive time this year, by 0.25%, to 5.15%, is in line with industry expectations and shows its decision to maintain an accommodative stance. While this rate cut would bring down the borrowing costs for home and auto loans since the RBI has mandated banks to link their retail loans like home, auto, to the external benchmarks like repo rates, the success of these rate cuts will depend on how effectively they are transmitted to the home loan borrowers. Combined with the government’s decision to create a Rs 20,000 stress fund for the real estate sector and the festive period, this move will go a long way in improving sentiments, and hopefully, give a boost to consumer spending which is the need of the hour, to reboot the economy.
