RBI raises repo rate by 0.25% to 6.50%, loans from banks will be expensive
The Reserve Bank of India (RBI) has increased the repo rate by 0.25 percent to 6.50 percent. At the same time, the reverse repo rate has been increased by 0.25% to 6.25%. Repo rate and reverse repo rates have been increased due to rising inflation. MPC voted in favor of raising all rates. A meeting of six-member Monetary Policy Committee (MPC), led by RBI governor Urjit Patel, was being held from June 4, after which interest rates have been increased. Let us know, for the first time since January 2014, the Reserve Bank has made changes in interest rates.
GDP estimate retained
RBI has retained the GDP growth estimate at 7.4 per cent in FY13. According to the RBI, GDP growth in April-September estimated to be 7.5-7.6 per cent. At the same time, the inflation rate expected to be 4.2 percent between July and September.
End of cheap debt
After the monetary policy, the RBI announced to increase the repo rate. With increasing repo rate, EMI of every kind will increase. With this step of the Reserve Bank, it is clear that now the phase of cheap debt is ending and you have to be prepared for expensive credit. All MPC members voted in favor of raising the rate.
Reserve Bank of India estimates increase in inflation. The inflation rate expected to be 4.2 percent between July and September. At the same time, in the first half of FY 2018-19, inflation could be 4.8-4.9 per cent. At the same time, there is a possibility of a slight decline in the second half and it can remain at 4.7 per cent.
What the growth forecast
RBI has retained GDP growth estimate for FY2019 at 7.4 per cent. GDP growth expected to be 7.3-7.4 per cent between October and March. RBI increased the inflation rate estimates. Inflation estimated to be 4.8-4.9 per cent between April and September. The inflation rate estimated to be 4.7 per cent between October and March.
Second rise in repo rate in Modi government
This is the second time during the Modi government’s tenure when the Reserve Bank has increased the repo rate. Earlier, the repo rate of 0.25 percent also increased in June’s credit policy. The MPC meeting, headed by RBI governor Urjit Patel, lasted 3 days for the first time. It has been two days before. A six-member Monetary Policy Committee (MPC) meeting led by RBI governor Urjit Patel.