RBI repo rate cut 2025-26: SBI Research predicts 100 bps (1%) reduction; homebuyers to benefit

Ahead of RBI Monetary Policy Committee (MPC) meeting starting today (April 7, 2025), SBI Research has predicted that the central bank may reduce the repo rate by 100 bps or 1% by March 2026. The repo rate cuts for FY 2025-26 may start in April itself with a 25 basis points or 0.25% cut this month.

The repo rate cuts for FY 2025-26 may start in April itself with a 25 basis points or 0.25% cut this month. The RBI had last reduced repo rate by 0.25% to 6.25% in its monetary policy meeting in February 2025.

In a report titled 'Prelude of MPC Meeting: April 7-9, 2025", SBI Research today said the first repo rate cut of FY 2025-26 may happen in April, after which there might be a pause in June 2025. However, the RBI may again start reducing the repo rate from August onwards. By March 2026, the central bank may reduce the repo rate by 100 bps or 1%.

"We expect a 25-basis point rate cut in April’25 policy. Cumulative rate cut over the cycle could be at least 100 basis points, with 2 successive rate cuts over February and April 2025. With an intervening gap in June’2025, the second round of rate cuts could start from August’2025," SBI Research said.

The RBI's MPC meeting will continue between April 7-April 9, following which it will declare its repo rate decision.

Benefit for homebuyers

Existing and aspiring homebuyers will benefit in a low repo rate regime. If you have a repo rate-linked home loan, your loan EMI amount or loan tenure will reduced if the RBI further cuts the repo rate. Moreover, new homebuyers will be able to get repo rate-linked home loans at lower interest rates.

For instance, if the RBI reduces the repo rate by 1% till March 2026, then the repo rate-linked home loan rate will also reduce by 1%.

The last repo rate cut in February 2025 led to 0.25% reduction in home loan interest rates. Most of the banks have already passed on the benefit of lower rate to their customers.

Global GDP to decline

As per the report, the global GDP may decline by 30-50 basis points or 0.3% tp 0.5% due to three reasons - Trade related tariff barriers, rapid currency swings and fractured capital flows.

"Global growth is likely to face significant headwinds due to non-linear yet intersecting trilemma of trade related tariff barriers, rapid currency swings and fractured capital flows.. downside of 30-50 basis points imminent global GDP growth," SBI Research said.

Further, the rate actions by central banks are expected to remain fuzzy going forward.

"The trajectory of rate action by Central Banks, while being accommodative, may remain fuzzy… In the emerging markets, rate will be conditional on the pass through of exchange rate depreciation on to domestic inflation," it said.