Home and personal loan borrowers may soon get another relief round in June 2025. As inflation numbers show an apparent decline, experts believe the Reserve Bank of India (RBI) could reduce the repo rate again in its upcoming Monetary Policy Committee (MPC) meeting.
After back-to-back cuts this year, a third reduction in interest rates could lower EMIs and help improve monthly budgets for ordinary people. This is a big sign of hope for middle-class families and businesses, especially those struggling with high loan payments.
Inflation Hits Lowest Levels in Years
According to the National Statistics Office (NSO), India’s retail inflation rate (CPI) dropped to 3.16% in April 2025 from 3.34% in March 2025. This is the lowest CPI inflation level in nearly six years, last seen in July 2019.
One of the key reasons behind this drop is food inflation, which fell to just 1.78% in April. This means the prices of essential items like vegetables, fruits, and food grains have been controlled.
At the same time, wholesale Inflation (WPI) also cooled down. As per data, WPI dropped to 0.85% in April, compared to 2.05% in March. This marks the lowest wholesale Inflation in 13 months. A significant reason was the fall in fuel and manufacturing product prices. Interestingly, vegetable inflation turned negative, at -18.26%, making items cheaper for businesses and retailers.
Repo Rate Cut Looks Likely in June 2025
The RBI’s decisions on repo rates are primarily based on retail inflation trends. Since the CPI rate is now much below the RBI’s 4% target, economists expect the central bank to cut another rate in June.
In April 2025, the RBI reduced the repo rate by 25 basis points to 6%. This was the second cut of the year. With both CPI and WPI easing further, the RBI has intense pressure to support growth by cutting rates again.
Experts Expect 25 to 50 Basis Points Cut in June
According to Aditi Nayar, Chief Economist at ICRA, “Inflation is likely to average around 3.5% in FY 2026. In Q2 and Q3, it may stay even lower, which gives space for more rate cuts.”
She added that a 25 basis point cut in June seems almost confirmed. After that, further cuts of 25 basis points each may happen in August and October, depending on growth and Inflation.
In a more optimistic outlook, she even said that if GDP growth remains slow, the RBI might go for a 50 basis point cut straight in June.
Paras Jasrai, Associate Director at India Ratings and Research, supports this view. He said, “After inflation stayed below 4% for three straight months, the RBI now has enough reason to reduce interest rates again.”
How It Will Affect Your EMI and Loans
When RBI cuts the repo rate, banks get funds at a cheaper rate. This allows them to reduce the interest rates on different types of loans. If the repo rate comes down in June again, banks are likely to pass on the benefit to customers.
This means borrowers of home loans, auto loans, and personal loans may see a reduction in their monthly EMIs. A small cut in the rate can save thousands of rupees every year.
For example, if you have a ₹50 lakh home loan at 9% for 20 years, a 25 basis point cut could reduce your EMI by ₹750–₹850 per month. Over the full loan term, this could result in nearly ₹2 lakh savings.
Even new borrowers will benefit from lower rates, making taking loans for homes, vehicles, or other personal needs cheaper.
Growth and Global Factors Also Play a Role
RBI has kept its focus on inflation control and financial stability over the past few years. However, now that Inflation is well within control, the central bank may shift slightly towards boosting growth.
Globally, too, many central banks either hold rates or cut them to support demand. With geopolitical tensions, slower global trade, and uncertain crude oil prices, India will need a strong domestic demand push, and cutting interest rates is one way to do that.
Positive Signs for the Indian Economy
Experts say India is in a sweet spot compared to other economies. Inflation is soft, the rupee is relatively stable, and crude prices have not spiked. This gives the RBI more flexibility to support growth without the risk of high Inflation coming back too soon.
If RBI cuts the repo rate again in June 2025, it could be a strong step toward reviving the economy, pushing up consumer demand, and making credit affordable.
Borrowers, especially middle-class families and small business owners, can expect some relief soon.
Source:
NSO, RBI, ICRA, India Ratings and Research
Disclaimer: This article is based on expert views and publicly available data. Loan rates may vary depending on your credit score, lender policy, and RBI’s final decision.
