As the Reserve Bank of India's Monetary Policy Committee (MPC) meeting takes center stage tomorrow, market participants are closely watching for a possible 25 bps repo rate cut. This meeting, the first under newly appointed RBI Governor Sanjay Malhotra, comes just days after the Union Budget 2025, which focused on boosting consumption through revised income tax slabs. Now, all eyes are on the central bank to complement these efforts with measures to stimulate GDP growth.

Sahil Lakshmanan, Chief Business Officer, CarePal Money

"The RBI is widely expected to announce a 25 bps repo rate cut, marking its first such move in five years. If implemented, this reduction could provide much-needed relief to borrowers, making home, auto, and personal loans more affordable. Lower EMIs would boost consumer spending, while businesses could benefit from reduced borrowing costs, potentially driving investment and job creation.

For investors, a rate cut may lead to shifts in asset allocations. Fixed-income returns could soften, prompting increased interest in equities, particularly in rate-sensitive sectors like banking, real estate, and infrastructure. While lower rates could spur economic momentum, challenges remain. The rupee’s depreciation and global market volatility may influence the RBI’s future decisions. This anticipated rate cut signals the central bank’s intent to support economic recovery amidst slowing growth and easing inflation. However, its effectiveness will depend on how banks transmit these benefits to end consumers. If the RBI follows through, borrowers should prepare to capitalize on lower rates, while investors must reassess strategies to navigate an evolving financial landscape."

Ankur Maheshwari, CFO, Freo

With the MPC’s upcoming decision, we are looking forward to a balanced approach that fosters both financial inclusion and investment growth. A potential repo rate cut could make credit more accessible, helping individuals manage liquidity needs. At the same time, maintaining attractive fixed deposit rates is crucial for digital-first investors seeking safe and rewarding savings options. We expect policy measures that strike the right balance—fueling economic expansion while ensuring savers continue to see value in their investments.

Rajesh Katoch, CEO, of EZ Capital:

A cut in the repo rate by the Reserve Bank of India has far-reaching effects on both the borrower and the investor. The borrowers, especially those with floating interest rate loans, will have lower lending rates as a result of a reduced repo rate. This means loans become cheaper and, consequently, the Equated Monthly Installments (EMIs) for home and personal loans decrease, which reduces the financial burden on the household. However, for most of these benefits to find their way down to the borrowers, individual banks have a say, and the nature of the interest rate attached to the loan—on which fixed-rate loans are immune to a repo rate cut. On the investment side, cutting the repo rate will usually lead to cuts in the interest rate terms attached to fixed-income instruments, such as bonds and fixed deposits, which may lead to poor returns for investors. Investors could shift their portfolios toward equities or other asset classes to attain better yields. Additionally, low repo rates will be an economic activity stimulant by stimulating the demand for consumers and business investment. Corporate earnings could positively react, leading to better performance by the equity market. On one hand, low loan costs for borrowers can prove to be very effective. Investors have to review their strategies for investing given this changing environment.

Murali Krishna V, Principal at Spyre VC

As we await the RBI's Monetary Policy Committee meeting, there is a sense of expectation for a rate cut. From a venture capital standpoint, a reduction in the repo rate would dramatically improve the investment landscape. With lower interest rates, borrowing costs for startups would be eased, and consumer spending would be triggered, thereby creating demand for innovative solutions.

The recent liquidity measures undertaken by the RBI have set a conducive stage for this potential shift. With the government's focus on consumption-led growth, a rate cut would align perfectly with the fiscal strategies outlined in the FY26 Budget. This could invigorate sectors like real estate and technology, where access to affordable capital is crucial for scaling operations. But we have to be careful here. Inflationary pressures and global uncertainties are factors that RBI has to run through carefully. Growth with price stability will be the delicate balance. If it decides to cut rates, this may even talk of a strong commitment to the economy, something that will be required to attract domestic and foreign investments in the next few years.