RBI Repo Rate: Relief in expensive installment or EMI will increase, will know in a while – rbi could announce another repo rate hike today to manage inflation
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The MPC meeting of RBI started on April 3. Retail inflation stood at 6.52 per cent in January and 6.44 per cent in February. This is higher than the RBI’s satisfactory level of 6 per cent. The decision will be taken after a comprehensive review of all domestic and international aspects related to monetary policy in the RBI MPC meeting. It will also take into account the situation of inflation and the recent steps of central banks of developed countries, damage to crops due to unseasonal rains and rising crude oil prices. The price of crude oil has increased a lot recently and it is believed that it can reach beyond $ 100.
how much can be the gain
According to Saugata Bhattacharya, Chief Economist, Axis Bank, increasing policy rates will help bring core inflation under control. He said, “My guess is that the rates can be increased by another 0.25 per cent.” Bhattacharya said that there is a slowdown in growth. The MPC may cut rates by the end of the third quarter of FY 2023-24, with some easing of inflation. He speculated that the central bank may change its stance to ‘neutral’ in the June review. Growth is showing signs of slowing, with real gross domestic product (GDP) growth expected to be six per cent in 2023-24, much lower than the Reserve Bank’s estimate of 6.4 per cent.
According to advisory firm Emkay Global Financial Services, RBI may increase the repo rate by 25 bps. But according to the latest Ecowrap report of SBI Research, RBI may hold on to the process of increasing the repo rate. The report claims the RBI has several reasons for doing so. In February, two members of the MPC opposed the decision to hike the repo rate. It is believed that this time also they can do the same.
To reduce inflation, break Reliance, Tata, Birla, Adani groups, Viral Acharya suggested
How much has the installment increased
Banks also require a lot of money for their needs or day-to-day operations. For this, banks take loan from RBI. The rate at which banks pay interest to the Reserve Bank on this loan is called the repo rate. When the bank will get a loan from the Reserve Bank at a lower rate of interest, then the cost of raising their funds will be less. Because of this, they can give cheaper loans to their customers. This means that the lower the repo rate, the lower the interest rates on your home, car or personal loan. If the Reserve Bank increases the repo rate, then banks will have to spend more money to raise money and they will also lend to their customers at a higher rate of interest.
When home loans were cheap, people took advantage of this to buy houses or flats. But now they are finding it difficult to pay the installments. In less than a year, the home loan interest rate has increased from 6.7 per cent to over 9.25 per cent. If someone had taken an interest of Rs 50 lakh in April 2019 at the rate of 6.7 per cent, then his loan would have ended in March 2039. But now its rate has reached 9.25 percent. Accordingly, his home loan will end in November 2050, which means he will have to pay 132 installments more than the original. That means he will have to pay 11 years more installments than the original tenure.
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