Loan EMIs will be cheaper again! RBI is about to deliver another piece of good news, find out when relief will be available
Loan borrowers may soon receive another gift. According to a report from Union Bank, the RBI may further cut the repo rate by 0.25% in February. This will make home and car loan EMIs cheaper. This estimate is based on the current inflation control.
RBI Repo Rate Cut News: The good news continues for homeowners and those paying hefty home loan EMIs. Following the December 2025 monetary policy relief, the burden on your pockets is expected to ease further in February 2026.
The Reserve Bank of India (RBI) is preparing to offer another significant gift to the common man in the coming days. While loan borrowers are rejoicing, FD investors may be concerned, as the reduction in interest rates will impact the returns on their deposits.
Will interest rates fall again in February?
According to a recent detailed report by the Union Bank of India (UBI), the central bank is likely to maintain its accommodative stance at the Monetary Policy Committee (MPC) meeting in February 2026. It is estimated that the RBI may further cut the repo rate by 25 basis points, or 0.25 percent.
Currently, the repo rate is at 5.25 percent. If the report's prediction proves correct and a reduction is made, the repo rate will fall directly to 5 percent.
This will directly impact the interest rates on your home loans, car loans, and personal loans. Banks will reduce their interest rates, significantly reducing your monthly installment (EMI) and resulting in savings in your monthly budget.
Inflation is under control, hence the discounts being given
The question now arises: why is the RBI constantly cutting interest rates? The answer lies in inflation data. The Union Bank report emphasizes that inflation is now largely under control and upward pressure on prices has eased.
The RBI has also acknowledged on several occasions that the inflation situation is no longer as dire. A very interesting analysis in the report is that if the inflation rate (about 0.50 percent) increased due to the rise in gold prices is removed, the actual inflation rate appears even lower.
However, taking a decision in February 2026 may be a bit challenging for the RBI because the base year for the CPI and GDP will change at that time. It will be important to see how the inflation and growth figures emerge under these new parameters.
The year 2025 has been full of relief
The year 2025 has proven to be a boon for borrowers. This year, the RBI has spared no effort in reducing interest rates. It's worth noting that the central bank has cut the repo rate four times throughout 2025.
At the beginning of the year, a 0.25 percent rate cut was provided in February and April. Then, in June, the RBI surprised everyone with a significant 0.50 percent rate cut.
The year ended on a positive note, with another 0.25 percent reduction in the December meeting, bringing the repo rate to 5.25 percent. Now, with a potential cut in February 2026, this rate could decline further, which will help increase cash flow in the economy and boost loan demand.
Reserve Bank of India