RBI sends clear signals to boost economic growth, say experts
The Reserve Bank has sent a clear and reassuring signal that policy instruments are being actively deployed to safeguard India’s economic growth amid persisting global headwinds, said experts on Friday.
Home, auto and other loans are likely to cost less as the RBI cut key benchmark interest rate for the first time in six months and vowed to provide Rs1 lakh crore liquidity boost to the banking sector to support a “goldilocks” economy in the face of high US tariffs.
The experts were commenting on the central bank’s decision to reduce short-term lending rate by 25 basis points and continue its neutral monetary policy stance.
President of industry body Ficci Anant Goenka said this calibrated easing will help stimulate credit offtake, reduce borrowing costs for industry and consumers, and reinforce the current growth momentum.
“Today’s monetary policy sends a clear and reassuring signal that policy instruments are being actively deployed to safeguard India’s growth trajectory and support economic expansion amid a challenging global environment,” he said.
President of Assocham Nirmal Minda said the RBI rate cut, coming after cumulative reduction of 125 bps this year, will lower borrowing costs, spur industrial expansion, and create significant employment opportunities across sectors.
A repo rate cut will lead to lower borrowing costs for individuals as well as corporates because it reduces the interest banks pay to borrow from the RBI. With cheaper funding, banks can lower lending rates such as MCLR and base rates, making home, auto, and business loans more affordable.
This reduces EMIs, encourages consumers and businesses to borrow more, and supports economic activity.
Commenting on the RBI’s decision, Mandar Pitale, Head of Financial Markets at SBM Bank (India) said that from the policy decision, it can be interpreted that Monetary Policy Committee (MPC) members are not foreseeing overheating in the economy despite very strong growth numbers and are more concerned on weak lead indicators which may retard the growth in near future if not acted upon.
SC Ralhan, President of exporters’ body FIEO, said a 25-bps cut in the repo rate will significantly lower the cost of credit for exporters, enabling them to invest more freely in working capital, technology upgradation, and international marketing efforts.
“This is a much-needed boost at a time when global demand is volatile and input costs remain unpredictable,” he said.
Navin Dhanuka, Director of ArisUnitern RE Solutions said lower home-loan EMIs will materially improve affordability and boost homebuyer confidence, especially in the mid-income and aspirational segments.
This policy shift strengthens project viability, accelerates on-ground execution and is likely to spur fresh supply as demand gains momentum, supporting broader growth across the real-estate sector, Dhanuka added.
Pyush Lohia, Director, Lohia Worldspace said RBI’s decision on repo rate reinforces market stability and signals a measured approach to balancing growth and inflation. “The upward revision of GDP growth to 7.3 per cent is particularly positive for Tier-2 markets, where rising aspirations meet the need for affordable, quality housing,” he added.
Shikhar Aggarwal, Chairman of BLS E-Services said the central bank’s decision to reduce the repo rate by 25 basis points to 5.25 per cent will give relief to homebuyers.
Anand Mody, Group COO and Co-Head Investment Banking, Aikyam Capital Group said the decision to cut repo rate to 5.25 per cent marks an important moment for India’s startup and early-stage ecosystem.
With borrowing costs down, banks and NBFCs can offer cheaper loans, reducing interest outgo and easing working-capital pressure for young companies, Mody said.
Ranen Banerjee, Partner and Economic Advisory Leader at PwC India said the MPC has also acted on the liquidity aspects, and the announcement on the rupee–US dollar swap is going to address the rupee volatility.
The higher inflation projection for Q4 of FY26 will help the nominal GDP growth numbers, which will provide the additional fiscal headroom needed for the Union Budget, he added.
Jash Panchamia, Executive Director, Jaypee Infratech Limited said the RBI’s decision to cut the repo rate by 25 basis points comes at an opportune moment, with inflation under control and the economy on a stable footing.
“The housing sector, particularly affordable and mid-segment housing, stands to benefit as lower home loan rates are likely to encourage cautious buyers to make their purchase decisions,” Panchamia added.
CEO and Co-Founder of Biz2X and Biz2Credit Rohit Arora said the rate cut, together with a clear commitment to durable liquidity via Rs1 lakh crore of OMO purchases and a three-year USD 5 billion USD/INR swap is a welcome, timely move to shore up growth while inflation remains subdued.
“For MSMEs this combination of lower rates and durable liquidity can translate into affordable, more predictable credit. This is, however, crucial as they manage rising input costs and look to expand capacity,” he said.
Madhusudhan G, CMD of Sumadhura Group said lower home-loan rates and reduced EMIs are set to meaningfully strengthen buyer sentiment, particularly among end-users and first-time homeowners who have been waiting for the right moment to enter the market.
This move not only enhances affordability but also broadens the pool of eligible buyers, reinforcing the steady demand seen across major metros, Madhusudhan added.
Friday’s rate cut decision will supplement the government’s recent initiatives like GST rationalization, tax breaks, notification of labour codes, etc., to minimize the adverse impact of global headwinds, AU Small Finance Bank MD & CEO Sanjay Agarwal said.
“The RBI decided to conduct OMO purchases of government securities worth Rs1 lakh crore which will certainly enhance credit growth in the economy and stimulate consumption. Banks and NBFCs are stand to gain from this,” Indel Money CEO Umesh Mohanan said. Next meeting of the MPC is scheduled for February 4-6, 2026.
