New Delhi: The meeting of the Monetary Policy Committee of the Reserve Bank of India (RBI) has ended. After the meeting, RBI Governor Shaktikanta Das has made an important announcement regarding the interest rate. The RBI Governor has announced an increase in repo rate by 25 basis points i.e. 0.25%. As a result the interest rate i.e. repo rate has increased from 6.25% to 6.50%. The three-day meeting of the Monetary Policy Committee (MPC) began on Monday. Informing about the outcome of this meeting today i.e. Wednesday, RBI Governor Shaktikanta Das said, “Keeping in view the current economic situation, the MPC has decided to increase the policy rate from 0.25 percent to 6.50 percent.”
RBI Governor Shaktikanta Das said that 4 out of 6 members of the Monetary Policy Committee voted in favor of raising the repo rate. However, this increase in the repo rate is less than the previous five increases. While setting the policy rate, the central bank mainly considers retail inflation. Retail inflation was 5.72 percent and wholesale inflation was 5.95 percent in December, which is within the RBI’s target range of 6 percent. Furthermore, Governor Shaktikanta Das said that in the last 3 years various challenges have created a challenge at the level of monetary policy for central banks across the world. Weak global demand, the current economic environment may affect domestic growth.
How will increase in repo rate affect loans?
These measures of the Reserve Bank will once again increase the burden on the common people. Loans to borrowers will be expensive. The EMIs of those who have outstanding loans will increase. Repo rate is the rate at which RBI lends to banks. So if the repo rate increases, the loan interest rate also increases. On the contrary, a reduction in the repo rate also reduces the loan interest rate.
RBI has hiked the repo rate for the sixth consecutive time
Let us tell you that RBI has increased the repo rate for the sixth consecutive time. Earlier, the Reserve Bank of India (RBI) had announced a 35 basis point hike in the repo rate in December 2022 to curb inflation. It was earlier hiked by 50 basis points in September 2022, 50 basis points in August 2002, 50 basis points in June and 40 basis points in May 2022.
Retail inflation is estimated at 6.5 percent in the current financial year
RBI Governor Shaktikanta Das said after the meeting that the inflation rate is expected to come down to 5.6 percent from 5.9 percent in the fourth quarter of FY2023. At the same time, retail inflation is estimated at 6.5 percent in the current fiscal year and 5.3 percent in the next fiscal year.
The GDP growth rate is expected to be 6.4 percent in the next financial year
The central bank has raised the GDP growth forecast for the current financial year 2022-23 to 7 percent from 6.8 percent. At the same time, the GDP growth rate is estimated at 6.4 percent in the next financial year. The RBI Governor said that the GDP growth rate is likely to be 7.8 percent in the first quarter of FY 2024. At the same time, he raised the GDP growth estimate for the second quarter of fiscal 2024 to 6.2% from 5.9%.
The RBI’s decision did not have any impact on the stock market
On one hand the Reserve Bank has increased the burden of inflation on the public by increasing the repo rate, on the other hand this announcement by the central bank has not seen any impact on the stock market. At 10.43 am the 30-share Sensex index of BSE was seen trending up 0.51% or 306.99 points at 60,593.03. NSE’s Nifty was also trending up 100 points or 0.56 percent at 17,821.50.