RBI repo rate hike: RBI hikes repo rate again, loan will be expensive, your EMI will increase

In view of the ever-increasing inflation, the Reserve Bank (RBI) has once again announced to increase the repo rate (RBI repo rate hike) on Thursday. Now the repo rate has been increased by 50 basis points. Now the repo rate has become 5.40 percent. This is the third hike by the RBI after a sudden […]
 


RBI repo rate hike: RBI hikes repo rate again, loan will be expensive, your EMI will increase

In view of the ever-increasing inflation, the Reserve Bank (RBI) has once again announced to increase the repo rate (RBI repo rate hike) on Thursday. Now the repo rate has been increased by 50 basis points. Now the repo rate has become 5.40 percent. This is the third hike by the RBI after a sudden 40 basis point hike in the repo rate in May and 50 basis points in June. The increase in the repo rate by RBI will increase the EMI of your other loans like home and car loans.

This is the third consecutive hike in the repo rate in a period of nearly four months. Reserve Bank Governor Shaktikanta Das today informed about the hike in the repo rate after the meeting of the Monetary Policy Committee in August. Inflation is at a decade high and the rupee is trading lower against the dollar. The RBI in May started raising rates in the wake of rate hikes by other central banks across the world. The Reserve Bank has increased policy rates by a total of 0.90 per cent in May and June to rein in rising inflation. Retail inflation in India traded above the Reserve Bank of India’s upper tolerance band of 6 per cent for the sixth consecutive month in June. Retail inflation declined to 7.01 per cent in June.

What is Repo Rate?

Repo rate is the rate at which RBI lends to commercial banks. Its full name is fertility rate, but it is abbreviated as repo rate. Lower repo rate means that all types of loans from the bank will become cheaper i.e. home loan, vehicle loan and personal loan all become cheaper due to lower repo rate. But it also increases the interest rate on your deposit. Similarly, as it grows, all types of loans become expensive.