Home and auto loans are set to become cheaper as the Reserve Bank of India (RBI) on Thursday lowered its key lending rate for commercial banks by 25 basis points (bps) to 5.75 per cent.Besides, the RBI changed the monetary policy stance from neutral to accommodative.Accordingly, the lower repo, or short-term lending rate for commercial banks, will reduce interest cost on automobile and home loans, thereby ushering in growth.
The decision to reduce the repo rate was taken by the RBI's Monetary Policy Committee (MPC) at its second monetary policy review of the current fiscal.