Today will see the release of the conclusions of the Monetary Policy Committee’s (MPC) three-day meeting, which determines the Reserve Bank of India’s (RBI) interest rate. Shaktikanta Das, governor of the Reserve Bank of India, will provide details regarding the outcomes of the MPC meeting. According to sources, the RBI may raise the Repo rate by 25 basis points this time as well. The Repo rate will go to 6.75 percent if the Reserve Bank raises it by 25 basis points this time.
A mortgage EMI will rise.
Experts also concur that this will put an end to the trend of interest rate increases that began in May 2022. The repo rate has gone up by 2.5 percent since May. The rate has grown throughout this time from 4% to 6.5%. The greatest level in the last four years is this. The interest rate is also affected by an increase in the repo rate. Let us inform you that all loan types, including personal, auto, and house loans, have increased in cost as a result of the rise in the repo rate.
The central bank is raising the repo rate to combat inflation.
First bi-monthly monetary policy announcement. The RBI will now make public the first bi-monthly monetary policy of the fiscal year 2023–2024. The central bank is raising the repo rate to combat inflation. Officials from the Finance Ministry feel that even if it has a negative impact on economic growth, the Reserve Bank (RBI) should prioritize keeping inflation within the 2–6% range. The interest rate must be raised in order to manage inflation.
The rate of inflation remains high.
According to a top official, the central bank should concentrate on reducing inflation until it falls below 6 percent even if it slows down growth. According to him, the rate of inflation is still high, which may have an impact on low-income individuals. Let me inform you that in February, the retail inflation rate decreased slightly to 6.44 percent. Earlier, in January, it was at 6.52 percent.
What outcome can we expect?
According to experts, the RBI’s hike in the repo rate will have an impact on banks’ interest rates. Banks have the authority to raise interest rates on both loans and FDs. This will extend the clients’ EMI on their home loans. In addition, the growth rate may slow down and inflation may increase.
The Repo rate is what?
Repo rate refers to the interest rate at which the RBI lends money to banks. Banks will be charged more for loans from the RBI if the rate is raised. This will result in higher house loans, auto loans, and personal loan interest rates, directly affecting your EMI.
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