RBI hikes repo rate by 0.50%, loans will be expensive

The Reserve Bank’s Monetary Policy Committee (RBI MPC meeting) scheduled for August 2022 has ended. RBI Governor Shaktikanta Das informed about the decisions taken today after the three-day meeting which is going on from Wednesday. He announced a 0.50% increase in the reported rate. Thus the report rate has now been increased from 4.90% to […]
 


RBI hikes repo rate by 0.50%, loans will be expensive

The Reserve Bank’s Monetary Policy Committee (RBI MPC meeting) scheduled for August 2022 has ended. RBI Governor Shaktikanta Das informed about the decisions taken today after the three-day meeting which is going on from Wednesday. He announced a 0.50% increase in the reported rate. Thus the report rate has now been increased from 4.90% to 5.40%. With this, the reported rate has increased by 1.40% in the last four months. Its direct effect will be seen on the people taking personal loan from home loan.

Despite these difficulties, relief from inflation

After the efforts of the government and the Reserve Bank, gradually inflation is being controlled. However, on the other hand, the central banks of many countries, including the US central bank, the Federal Reserve, are aggressively raising interest rates. The Federal Reserve continues to raise interest rates due to historical inflation in the US. The Bank of England also this week announced the biggest increase in interest rates in a record 27 years. Due to this, almost all analysts were confident that the repo rate would only increase. Like the previous meeting i.e. June, this time also the repo rate will increase, remain stable or will decrease, there is no question on it.

Rate not increased for four years

To control inflation, the Reserve Bank has started increasing the repo rate from May this year. The Reserve Bank had called an emergency meeting of the Monetary Policy Committee (RBI MPC meeting) in May. Due to rising inflation, the Reserve Bank had to do this. In the meeting of May 2022, the Reserve Bank had increased the repo rate by 0.40 percent. This was followed by a regular meeting of the Monetary Policy Committee in June, in which the repo rate was increased by 0.50 percent. RBI changed the repo rate in May for the first time in almost two years. For almost two years, the repo rate remained only 4 per cent. At present the repo rate is 4.90 per cent.

Repo rate may increase so much

According to Aditi Nair, Chief Economist of credit rating agency ICRA, this time also the RBI repo rate has been increased to 0.50%. According to the ICRA, the monetary policy committee of the Reserve Bank gave more importance to the balance of domestic economic growth and inflation than the pace of rate hikes by the Federal Reserve. The Reserve Bank will also consider the movement of the rupee while setting rates. A higher interest rate differential against the US may trigger selling by foreign investors, which is bad for both the rupee’s value and India’s foreign exchange reserves. will be proved.

EMI burden will increase

Experts say that the RBI may adopt a similar stance after raising interest rates from 0.35% to 0.50% in its August meeting. If the repo rate continues to increase like this, then the banks will also increase the interest rates. The increase in interest rates will have a direct impact on those who are paying EMI of home loan or personal loan. Also, those who are planning to buy a home or a car in the near future may have to bear the burden of increased EMIs.