The Reserve Bank of India (RBI) has increased the key policy rate repo by 0.25 percent to 6.50 percent in the bi-monthly monetary policy review on Wednesday. Industry experts have expressed hope after this increase that in May, amid rising inflation, this was the sixth consecutive increase in interest rates, although the amount remained low. The central bank has increased the repo rate by 2.50 per cent since May last year. The government had taken this step to control rising inflation amid global pressure.
Deepak Sood, Secretary General, industry body Assocham, said, “There is no doubt that today, amid a challenging global environment, reducing inflation was a priority for the RBI-Monetary Policy Committee and the central bank has done a commendable job of keeping inflation under control .” He said, “Looking at the broad objective of sustainable growth, we believe that this is the last increase in interest rates in the current cycle.” was increased by 0.50 percent.
Bank of Baroda Chief Economist Madan Sabnavis said on RBI’s policy review, “At the moment it seems that there may be a risk of inflation going up, hence the interest rates have been increased. There does not appear to be much possibility of rate cut in the current year.” PHDCCI President Saket Dalmiya said on the decision to increase the repo rate that it will affect the possibility of consumption in factories and the demand for consumption. He said, “We expect further pause in the policy rates amid the ongoing inflation for the last few months.”
V Swaminathan, Executive Chairman, Andromeda Sales and ApnaPaisa.com, said, “Today the repo rate increase is 0.25 per cent, which will make EMIs costlier by around 2-4 per cent. Borrowers will either have to pay additional money in each installment or extend the loan tenure to repay their loan.
He explained, “Since May 2022, the repo rate has been increased by two and a half percent. Under this, the monthly installment (EMI) of a housing loan of Rs 70 lakh taken at an interest rate of seven percent in May 2022 will be Rs 54,271. He then added, “But if we add the increase of 2.5 per cent, the interest rate will be 9.50 per cent and the EMI will come to Rs 65,249.”
Bhavik Thakkar, CEO of Abans Investment Manager also said that increasing the repo rate will make all types of loans costlier. This time, its effect on the people taking home loan will not only be in the form of loan period, but their monthly installment will also increase. The next meeting of the Monetary Policy Committee will be held on April 3-6, 2023.