RBI repo rate cut: How it impacts debt mutual funds, FDs and loans

The Reserve Bank of India (RBI) reduced the repo rate by 25 basis points (bps) to 6.25 per cent today on February 7, 2025. This marks the first rate cut in nearly five years. The last rate cut occurred in May 2020, when the RBI lowered rates to 4 per cent to support the Covid-hit economy. Later, as growth recovered, a rate hike cycle began in May 2022 until February 2023 when the repo rate reached 6.50 per cent. Since then, rates remained unchanged as the RBI balanced inflation concerns with growth. However, with an easing inflation and GDP growth slowing to a four-year low, there was growing anticipation of a rate cut—which has now materialised. We now look at how the rate cut impacts your debt investments, loans, and savings. Impact on debt mutual funds Interest rate cuts po