Reserve Bank of India cuts interest rate on home loans

Guwahati: In a sort of good news for the ones who are looking for taking up home loans and get themselves a home of their own the Reserve Bank of India has made a new announcement. The monetary policy committee of RBI, in the latest move, has reduced the policy interest rate by 25 basis points to 6.25 %. The best part is that this move will cut the interest rate in home loans which is hoping to invite more and more people to opt for home loans.

The committee’s meeting held on Thursday is the first after Shaktikanta Das took over as the central bank’s Governor. The outcome of the meeting signals further rate cuts on home loans. The inflation estimates have been revised very sharply by RBI.

The committee comprised of six members who voted in 4:2 ratio favouring the rate cut. However, the decision to change policy stance was unanimous. The four members voting in favour of the rate cut include Shaktikanta Das and three others, while Deputy Governor Viral Acharya and another MPC member, Chetan Ghate voted for status quo in interest rates.

As stated by the monetary policy committee, the rate cut is in consonance of achieving the medium-term objective of maintaining inflation at the 4 per cent level while also supporting growth.

A media report states, “Investment activity is recovering but supported mainly by public spending on infrastructure. The need is to strengthen private investment activity and buttress private consumption.”

Before this, the last rate cut by the RBI was a cut to 6.00 per cent which was done in August 2017.

However, the latest decision of rate cut on home loans by the RBI can also be counted in connection with the Narendra Modi government at the Centre as the current government is boosting growth ahead of the elections.

As the BJP government recently announced its interim budget which happens to be the last budget ahead of this year’s national elections and the ruling party is also looking for making further lucrative schemes, this new announcement of an interest rate cut in home loans comes as a good offer for the common masses.

Also read: Reserve Bank of India’s new growth steps