Home and car loan EMIs likely to rise
Mumbai: As expected, the Reserve Bank of India (RBI) raised interest rates again. In this phase, the repo rate was increased by 25 basis points to 6.50 percent. Earlier on December 7, the repo rate was increased by 35 basis points to 6.25 percent. The new repo rate was announced at the end of the three-day meeting of the Reserve Bank's Monetary Policy Committee (MPC). In the meeting, out of six members, two members voted against the rate hike and four members voted in favor of the rate hike. This is the first meeting of the Economic Policy Committee this year. The Reserve Bank increased the interest rate once more to curb inflation. Note, the rate at which the Reserve Bank lends money to commercial banks is called the repo rate. The rate at which commercial banks lend to the Reserve Bank is called the reverse repo rate. This time, however, the reverse repo rate has been kept unchanged. While announcing the new repo rate today, RBI Governor Shaktikanta Das said that the world economy is no longer looking so gray and inflation is also coming down. However, there has been a challenge at the level of monetary policy for central banks around the world due to various challenges in the last three years. The RBI has forecast India's national income to grow by 6.4 per cent in the financial year 2022-23.
The rise in interest rates will have a direct impact on the interest rates banks offer to their customers. The RBI hiked interest rates once more to rein in inflation, but the rising commodity prices put more pressure on the middle class. EMIs on home and car loans go up due to rising interest rates. As a result, those who have taken loans will have to pay more money, as well as those who were planning to buy houses or cars instead of bank loans, will have to postpone those plans. The Reserve Bank has hiked the repo rate six times since May 2022. Repo rate increased by 2.50 percent in 9 months. Based on the recommendations of the Monetary Policy Committee, the RBI raised the repo rate by 0.4 percent for the first time on May 4. RBI then increased the repo rate by 0.5 percent on June 8, 0.5 percent on August 5, 0.5 percent on September 30 and 0.35 percent on December 7.
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