The rate cut will reduce repayment burden on individuals as well as corporates, experts said

PTI New Delhi

Home, auto and other loans are likely to cost less as the Reserve Bank of India (RBI) cut interest rates by a larger-than-expected 50 basis points on Friday, and unexpectedly reduced the cash reserve ratio for banks to make available more money to lend in a bid to boost the economy. Bandhan Bank Chief Economist Siddhartha Sanyal said the MPC meeting sprang several major surprises, including 50 bps against expectation of a 25 bps rate cut.

"However, given the change in stance of monetary policy from accommodative to neutral and the RBI's communication of very little space for more support from monetary policy, our expectation of a terminal repo rate of 5.50 per cent in the current cycle remains largely unchanged," Sanyal said.

Bank of Baroda Chief Economist Madan Sabnavis said the RBI has surprised with a 50 bps cut in repo rate and cut in CRR. However, significantly it has been stated that the stance is changed to neutral, which also means that we may not expect rate cuts in the near future. Shikhar Aggarwal, Chairman of BLS E Services, said the reduction in repo rate will bring relief to borrowers with lower EMIs, marking a cumulative 100 bps reduction since February.