RBI MPC Meet Updates: Banks will pass on the burden of this hike in repo rate to their customers. This will increase your loan EMI. Along with the home loan, the EMI of auto loan and personal loan will also increase. Repo rate is also known as prime interest rate. Repo rate is the rate at which commercial banks borrow money from RBI.
New Delhi: The Reserve Bank of India (RBI) has decided to increase the key interest rate i.e. Repo Rate by 0.50 percent. With this, the repo rate has now increased to 5.40 percent. In the last policy announcement made on June 8, the RBI had increased the repo rate by half a percentage point. Due to this, the repo rate had increased to 4.90 percent. Recently, the US central bank Federal Reserve (US Fed) also increased interest rates. Due to this, it was expected that the RBI would also take a decision to increase the interest rates. The Reserve Bank of India has increased the repo rate to bring down inflation. RBI Governor Shaktikanta Das is giving information about the decisions of the Monetary Policy Committee.
EMI will increase so much
Banks will pass on the burden of this hike in the repo rate to their customers. This will increase your loan installment. Along with the home loan, the installment of auto loan and personal loan will also increase. If your home loan is of Rs 30 lakh and the tenure is of 20 years, then your installment will increase from Rs 24,168 to Rs 25,093. Let us know that if the interest rate on the loan increases from 7.5 percent to 8 percent, what will be the difference on the EMI.
|Amount||Duration||Rate of interest||Installment (in Rs.)||revised rate||Installment (in Rs.)||Increase (in Rs.)|
|30 lakh rupees||20 years||7.5%||24,168||8%||25,093||925|
|20 lakh rupees||20 years||7.5%||16,112||8%||16,729||617|
|10 lakh rupees||20 years||7.5%||8,056||8%||8,364||308|
RBI hikes repo rate by 50 basis points to 5.4% with immediate effect pic.twitter.com/axs5EMdvIM
— ANI (@ANI) August 5, 2022
With this increase in the repo rate by the RBI , the repo rate reached the level before Corona,
It has become the highest since August 2019. In this way, the repo rate has now reached the level before the corona epidemic. Significantly, the RBI had already announced that it will gradually withdraw its liberal stance.
GDP growth forecast kept intact
RBI has retained the country’s GDP growth forecast for the financial year 2023 at 7.2 per cent. The RBI governor said that the marginal standing facility (MSF) and bank rates have been increased from 5.15 per cent to 5.65 per cent.
Inflation expected to be above 6 percent
The RBI governor said consumer price index (CPI)-based inflation remains uncomfortably high and is expected to remain above 6%. RBI has retained the CPI-based inflation rate forecast for the current fiscal at 6.7 per cent. At the same time, the RBI has projected the CPI-based inflation to be at 5 percent for the first quarter of the next financial year.
Repo rate is also known as prime interest rate. Repo rate is the rate at which commercial banks borrow money from RBI. When lending becomes expensive for banks, they also give loans to customers at higher rates. This simply means that loans like home loans, car loans and personal loans become expensive when the repo rate increases. Apart from this, the interest paid to the customers on their deposits is also largely determined by the repo rate. That is, when there is an increase in the repo rate, banks increase the interest rates on FD.
Why does RBI increase the repo rate?
The Reserve Bank of India raises the key interest rates to control inflation. In this way RBI works to control demand by tightening monetary policy. There has been a marginal decline in inflation based on the Consumer Price Index after the RBI hiked the repo rate. Inflation in the US is currently at a 40-year high. To reduce this inflation, the Federal Reserve is increasing interest rates continuously. Significantly, when the corona virus epidemic came, central banks around the world had eased monetary policy and reduced rates significantly. RBI has already announced that it will gradually withdraw its liberal stance.
This increase in rates is the fastest in a decade
Home loan EMI payers should gear up to pay more. After the increase in the repo rate by the Reserve Bank of India, banks have started increasing the loan rates. According to a report in the Economic Times, this increase is the fastest in a decade.