New Delhi, July 3 -- The Reserve Bank of India (RBI) recently announced a reduction in the repo rate by 50 basis points, bringing it down to 5.5%. The repo rate is the interest rate at which the RBI lends money to commercial banks, and a reduction typically signals an intention to stimulate economic activity by making borrowing cheaper.

This move is expected to lower lending rates across banks and financial institutions, making loans more affordable for consumers. As borrowing becomes less expensive, households may be encouraged to take loans for homes, vehicles, and other big-ticket items, thereby supporting economic activity.

For new borrowers, the reduction translates into lower interest rates, resulting in smaller Equated Monthly In...