Loan will be expensive again in April? RBI may increase repo rate by 0.25%
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Mumbai : There is important news for those taking home loan, car loan and personal loan from government or private banks. Loans are likely to become costlier in April. According to media reports, in the first week of April, there will be a bi-monthly monetary review meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), in which the main policy interest rate repo rate can be increased by 0.25 percent. However, a decision to reduce rates can be taken at the end of the third quarter of 2023-24. The meeting of the Monetary Policy Committee of RBI will be held from April 3 to 6. The repo rate will be announced on April 6.
Economists suggested to increase interest
According to media reports, RBI officials met economists on Tuesday, who have suggested the central bank to increase the repo rate by 0.25 percent. To control rising inflation, RBI is continuously increasing the repo rate from May 2022. Till now the repo rate has been increased by about 2.5 percent. Saugat Bhattacharya, chief economist at Axis Bank, said that increasing the repo rate will help in controlling stubborn inflation. My guess is that the repo rate can be increased by 0.25 percent.
Interest may decrease in November
Saugat Bhattacharya said that there is a softening in the growth. Apart from this, due to some reduction in inflation, the Monetary Policy Committee (MPC) may cut the repo rate by the end of the third quarter of the financial year 2023-24 i.e. in November 2023. It is too early to reverse the RBI trend of ‘dropping the accommodative stance’. Saying this, he speculated that the central bank may ‘neutralize’ its stance in the June review.
GDP growth can be 6 percent in 2023-24
He said that growth is showing signs of moderation, due to which real gross domestic product (GDP) growth in 2023-24 could be 6 per cent, which is much lower than the Reserve Bank’s estimate of 6.4 per cent. He further said that by the end of the third quarter of 2023-24, when the growth slowdown becomes more evident, inflation will come down to 5-5.50 per cent. Then RBI can cut rates by 0.25 percent. As a result, the key repo rate at the end of 2023-24 will be at 6.50 per cent, the same level as it was at the beginning of the financial year.
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