RBI holds repo rate at 5.25%: 5 assumptions about EMIs, FD rates and inflation salaried employees shouldn’t make

The Reserve Bank of India (RBI) on Wednesday kept the repo rate unchanged at 5.25% for the fourth consecutive monetary policy review, signalling that interest rates are likely to remain stable for now even as the central bank marginally improved its outlook on growth and inflation.

The RBI raised its FY27 GDP growth forecast to 6.7% from 6.6% and lowered its retail inflation projection to 5% from 5.1%. However, it also cautioned that global uncertainties and food- and fuel-related price pressures continue to warrant a cautious approach.

For salaried employees, the policy does not automatically translate into lower borrowing costs or a sharp change in savings returns. Here are five assumptions you should avoid making after today’s RBI policy.

1. Your EMIs will immediately fall

An unchanged repo rate means borrowers should not expect an immediate reduction in their monthly loan repayments.

“Borrowers expecting an immediate reduction in EMIs may have to wait a little longer. Since most floating-rate home and personal loans are linked to external benchmarks such as the repo rate, EMIs are likely to remain unchanged at the moment,” said Adhil Shetty, CEO, BankBazaar.

Echoing the view, Chirag Muni, Executive Director, Anand Rathi Wealth, said borrowers hoping for immediate relief are likely to be disappointed.

“With the RBI keeping the repo rate unchanged at 5.25% and adopting a data-dependent approach, any rate cut will depend on inflation easing on a sustained basis and global risks becoming more predictable. Until then, borrowers should focus on managing existing loans efficiently rather than waiting for an immediate reduction in EMIs,” he said.

2. Home loan EMIs will become cheaper

Home loan borrowers should also not assume that today’s policy will reduce their monthly instalments.

Since most floating-rate home loans are linked to external benchmark lending rates (EBLR), an unchanged repo rate means lenders have little reason to revise interest rates immediately.

“Home loan borrowers should not expect any immediate change in their EMIs following the RBI’s latest policy decision. As long as the policy rate remains steady, borrowers on repo-linked loans are unlikely to see any reduction in their monthly repayments,” Shetty said.

Instead of waiting for lower rates, Muni advised borrowers to compare lenders on interest rate spreads, processing charges and repayment flexibility, which could have a bigger impact over the life of the loan than waiting for another rate cut.

3. FD rates will crash tomorrow

The RBI’s decision does not mean banks will immediately reduce fixed deposit rates.

While the repo rate influences deposit rates, banks also factor in liquidity, deposit mobilisation needs and credit demand before revising FD offerings.

“With the RBI maintaining the repo rate at 5.25%, banks have little immediate pressure to make broad changes to deposit rates. However, individual lenders may still make selective revisions,” Shetty said.

Mahesh Shukla, Founder and CEO of PayMe, said stable repo rates and comfortable liquidity mean there is little scope for significant changes in FD rates, although individual banks may tweak rates based on their funding requirements.

Muni added that FD rates currently remain broadly stable, but investors should remember that with inflation projected at 5% for FY27, inflation-adjusted returns on deposits remain limited.

4. Inflation is no longer a concern

The RBI has marginally lowered its inflation forecast, but that should not be interpreted as the end of inflationary pressures.

“Today’s policy guidance suggests that inflation is likely to remain a key consideration for household finances. Building a slightly larger buffer into monthly budgets, reviewing discretionary spending and maintaining an adequate emergency fund can help households absorb higher living costs,” Shetty said.

Muni noted that while headline inflation is projected at 5%, many households could experience much higher inflation depending on their spending patterns. Families with higher expenditure on healthcare, education, travel and dining out may face inflation well above the headline number, making regular budgeting and long-term investing even more important.

5. Personal loans will become affordable

Borrowers should also avoid assuming that personal loans will become cheaper after today’s policy.

With the RBI maintaining the repo rate at 5.25%, banks have no immediate trigger to lower lending rates, meaning personal loan borrowers are unlikely to see any meaningful reduction in borrowing costs in the near term.

“As the repo rate remains unchanged, banks have no fresh cue to lower lending rates, so most borrowers’ EMIs should stay largely where they are for now,” Shukla said.

For salaried employees, today’s RBI policy means planning around existing EMI commitments, avoiding assumptions of cheaper loans or sharply lower FD rates, and continuing to budget for elevated living costs until there is clearer evidence of easing inflation and a change in the RBI’s policy stance.