New Delhi: The Reserve Bank of India (RBI) has increased the repo rate for the fifth consecutive time this year. RBI has announced an increase in repo rate by 0.35 percent. According to RBI, the repo rate will now increase from 5.90 percent to 6.25 percent. With this decision, all types of loans, including home loans, will become expensive. After the MPC meeting, RBI Governor Shaktikanta Das announced the policy rate hike on Wednesday.
Loans will become expensive
The common man of the country has been hit once again. Following the Reserve Bank of India (RBI) monetary policy meeting, Governor Shaktikanta Das has announced the fifth consecutive hike in the repo rate this year. After this, all types of loans, including home loans-auto loans, will become expensive and people will have to pay more EMIs.
This year there has been an increase of 2.25%
After the current increase in the repo rate in the last month of the year (RBI Repo Rate Hike), the rate has reached 6.25 percent. This year the central bank has hiked interest rates by a total of 2.25 percent. RBI Governor Shaktikanta Das said that our aim is to bring down the inflation rate in the country below the set target of 6 percent. The Reserve Bank of India has maintained the CPI inflation forecast for FY23 at 6.7%. Along with this, the inflation rate is expected to remain above 4% in the next 12 months.
Let us tell you that retail inflation in the country has decreased to 6.77 percent in October. Announcing the repo rate hike after the six-member MPC meeting in Mumbai, the RBI governor said the standing deposit facility (SDF rate) was adjusted by 6 percent and the marginal standing facility (MSF rate) and the bank rate. 6.5 percent.
Estimated at 6.8 percent of GDP in FY23
Along with this, RBI Governor Shaktikanta Das has estimated the GDP growth rate to be 6.8 percent for the financial year 2022-23. Earlier, the Central Bank had estimated 7 percent. He said that despite the global challenges, India’s growth rate is balanced. He said demand has increased, especially in rural areas, which is supporting the economy.
The prediction of increase in repo rate came true
A hike in the repo rate was already being predicted. In several reports, experts have expressed apprehensions that the central bank may hike the policy rate by 25-35 basis points despite easing inflation. Significantly, inflation in the country had been at a high level for a long time, but last October saw a decline.
So far the repo rate has increased so much
The process of increasing the repo rate by the Reserve Bank was started from the month of May 2022. Subsequently, the repo rate was increased by 0.40 percent. The following month in June, the RBI again hiked interest rates by 0.50 percent. This trend continued and saw a 0.50 percent hike in August, while the central bank hiked the policy rate by 0.50 percent in September as well. This is now the fifth time that the central bank has increased people’s pocket money.
Effect of repo rate on EMI
The repo rate is the rate at which RBI lends to banks, while the reverse repo rate is the rate at which RBI pays interest to banks for holding money. A fall in the repo rate reduces the EMI of the loan, while an increase in the repo rate makes all types of loans costlier and in turn increases the EMI.