marking the second consecutive rate cut this year. This decision aims to stimulate India's slowing economy amid global uncertainties, particularly due to heightened U.S. tariffs.
For middle-class individuals, this rate reduction can lead to lower equated monthly installments (EMIs) on loans, including home and vehicle loans, making borrowing more affordable. For example, on a ₹80 lakh home loan over 20 years, a 25 basis point rate cut could reduce the EMI by approximately ₹1,281, translating to a total interest savings of around ₹3.07 lakh over the loan tenure.
Additionally, the RBI's shift to an "accommodative" monetary stance suggests the possibility of further rate cuts, which could provide continued relief to borrowers. However, it's important to note that banks may take some time to fully transmit the benefits of these rate cuts to customers, depending on their policies and rate cycles.
Overall, the RBI's actions are expected to ease the financial burden on middle-class borrowers by reducing loan servicing costs, thereby enhancing disposable income and potentially boosting consumer spending.