New Delhi, June 24 -- While a reduction in the repo rate was anticipated in the latest Monetary Policy Committee (MPC) meeting, the 50 basis point cut came as a surprise. From February 2023 to February 2025, the repo rate remained unchanged at 6.5%. Since then, the Reserve Bank of India (RBI) has reduced the rate by a total of 1%, bringing it down to 5.5%. Although this is slightly higher than the rates seen during the COVID-19 pandemic, 5.5% is still considered relatively low.

The repo rate directly influences the lending and deposit rates set by banks. For individuals, this translates into the interest they pay on loans and the returns they earn on deposits, especially fixed deposits (FDs) and recurring deposits (RDs). For home loans w...