RBI’s Latest Policy Update: How It Impact on Loans and EMIs

Key Highlights:

The RBI Monetary Policy Committee (MPC) has maintained the repo rate at 5.25 % (April 2026) and the reserve repo rate at 3.35% in its latest meeting.

Quick Look:

1. The repo rate stayed at 5.25% in the April 2026 MCP meeting.

2. Reverse repo rate remains unchanged at 3.35%.

3. CPI inflation for FY27 is projected at 4.6%.

4. The RBI maintains a neutral stance.

As of April 2026, the Reserve Bank of India has maintained a status quo, keeping the repo rate unchanged at 5.25%. The key focus of the Monetary Policy Committee, led by Governor Sanjay Malhotra, has been in balancing inflation with economic growth amid rising global energy prices. It has maintained a ‘wait-and-watch’ stance amid supply chain disruptions and geopolitical tensions. This announcement has brought a sense of stability among borrowers and financial markets.

The RBI last changed the  repo rate in December 2025, when it was cut by 25 basis points to 5.25%.

Unchanged Repo Rate’s Impact on Loan Interest Rates

Typically, banks adjust their lending rates based on changes in the repo rate. Since the repo rate remains unchanged in the latest announcement, loan interest rates are expected to stay stable for now.

What Is The Repo Rate?

The Repo Rate, short for ‘repurchase rate’, is the interest charged by the RBI when it lends short-term loans to the commercial banks against government securities to control money supply in the market.

What the Latest Policy Means for EMIs

Since the RBI has kept the repo rate unchanged, there is no immediate impact on EMIs for most borrowers.

This stability is beneficial for existing borrowers as it allows them to plan their finances without worrying about sudden increase in repayments. As for new borrowers, lending rates are also expected to remain stable. This creates a relatively predictable environment for taking loans.

What Does This Means for Borrowers?

Any change in repo rate significantly affects the interest rate at which the commercial bank lends money. It's crucial in determining loan interest rates and EMIs (equated monthly instalments) for borrowers. 

When the repo rate rises, banks increase the interest rates which makes loans more expensive, whereas when the repo rate falls, banks decrease interest rates which make loans cheaper.

Final Thoughts

The RBI’s latest policy offers short-term stability for borrowers. With the unchanged repo rate RBI has tried to “anchor inflation expectations through policy tightening while minimising its impact on growth foregone”

Sources:

ABP, The Hindu