Interest rates are going to increase on loans, Reserve Bank may increase the repo rate once again

The Reserve Bank of India may announce a hike in the benchmark interest rate, repo rate on Thursday after the three-day meeting of its Monetary Policy Committee. Governor Shaktikanta Das will announce the results of the meetings tomorrow at 10 am, followed by a press conference in the afternoon. The RBI began its first bi-monthly review of the new financial year with its Monetary Policy Committee meeting on April 3, April 5 and April 6. The central bank has six bi-monthly reviews of its monetary policy in a year. And, there are out-of-cycle reviews in which the central bank holds additional meetings in times of emergency.

In the RBI’s latest Monetary Policy Committee (MPC) in early February, it decided to increase the repo rate by 25 basis points to 6.5 per cent to manage inflation. So far, the RBI has cumulatively raised the repo rate, the rate at which it lends to banks, by 250 basis points from May 2022. Raising interest rates is a monetary policy tool that usually helps suppress demand in the economy, thereby reducing the rate of inflation.

These meetings are being watched closely by stakeholders as almost every central bank tries to take stock of rising inflation with fears of a mild recession. According to the latest Ecowrap report by SBI Research, RBI is expected to pause its interest rate hike and the current 6.5 per cent repo rate could be the final rate for now.