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The new Reserve Bank of India (RBI) Governor Sanjay Malhotra cut the repo rate by 25 basis points from 6.5% to 6.25% on Friday, February 7, during the Monetary Policy Committee (MPC) meeting after keeping it unchanged for two years. This is the first-rate cut initiated by the RBI in five years, the last one being in May 2020. RBI said that it will continue to strengthen, rationalise, and refine the prudential framework, recognising the need for efficiency in the economy.The repo rate till now was at 6.5%. The move comes barely a week after the Centre cut personal income tax as no income tax at 1200,000 lakh slab annually in its recently concluded Budget session. RBI Governor Sanjay Malhotra said that average inflation has remained lower since the introduction of the monetary policy framework. “Indian economy remains strong, though not immune to global challenges,” he added.Also Read | What Is 'fin.in'? Banks to Get Special Domain to Curb Cyber Frauds, Registration Begins in April 2025.The policy is being announced amid global uncertainty over the tariff war between the United States and China. US President Donald Trump announced tariffs on Mexico and Canada, which have been postponed for a month. The tariffs have also triggered a fear of global trade wars, resulting in a rise in the dollar against major currencies on Monday.The rate increase cycle was paused in April 2023 after six consecutive rate hikes, aggregating 250 basis points since May 2022. The last rate hike was by the RBI in February 2023. Post-budget, the Finance Ministry made a case for a rate cut by saying that fiscal and monetary policy should work in tandem.It was an indication that the RBI should cut rate as the Union Budget has announced several measures including income tax relief. Earlier this week, Finance Secretary Tuhin Kanta Pandey had said the government has taken measures to lower fiscal deficit and delivered a non-inflationary Budget, and hoped that the RBI's monetary policy will work in tandem with fiscal policy to support growth.Rahul Singla, Director, Mapsko Group said, "The recent RBI repo rate cut by 25 basis points, bringing it down to 6.25%, is a positive development for the real estate sector. For developers, this translates into lower borrowing costs, potentially reducing project financing expenses, and facilitating smoother cash flows for ongoing and future developments. Investors stand to benefit from more attractive returns on real estate investments, as reduced interest rates make property acquisition more affordable. Homebuyers will also experience lower home loan EMIs, enhancing their purchasing power and confidence in entering the market. Overall, this reduction in the repo rate is likely to stimulate demand across residential and commercial segments, fostering growth and stability in the real estate sector."

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