For several months, the repo rate had remained at 4 per cent, which was a historical low level. Due to inflation, there was pressure on the Reserve Bank to raise interest rates.
Now by increasing the repo rate by 0.40 percent, it has been decided that from home loans to car loans will become expensive.
Increased repo rate
The round of cheap loans will end, EMI will increase
Inflation forced RBI
The Reserve Bank (RBI) announced a sudden repo rate Hike on Wednesday after a long hiatus. Now the repo rate has increased by 0.40 per cent to 4.40 per cent in one fell swoop. With this, the round of cheap loans has now ended. With this announcement of the Reserve Bank, the burden of EMI on people has been fixed to increase.
Sudden RBI MPC meeting
RBI Governor Shaktikant Das held a sudden press conference on Wednesday. Governor Das told the conference that a decision has been taken to increase the repo rate by 0.40 per cent.
He said the central bank's monetary policy committee held a meeting to discuss the situation in the economy.
In this meeting, the members of the MPC unanimously decided to raise the repo rate by 0.40 per cent. The MPC took this decision due to uncontrollable inflation.
These factors lead to uncontrollable inflation
The RBI Governor, addressing the media after the MPC meeting, said that retail inflation rose sharply in March 2022 and reached 7 per cent.
Especially due to the inflation of food and drink items, the headline CPI inflation i.e. retail inflation has increased sharply.
Apart from this, geopolitical tension has also increased inflation.
Let us tell you that due to the months-long war between Russia and Ukraine, the prices of many grains, including wheat, have increased.
This tension has also affected the global supply chain. Governor Das was talking about this geopolitical tension.
The MPC meeting took place last month.
Interestingly, earlier on April 8 fiscal year 2022-23 (FY23) for the Reserve Bank of India (RBI) the first monetary policy (MPC) review meeting was.
At that time, the Reserve Bank had retained the repo Rate and reverse repo Rate at the old level in a record 11th consecutive meeting. But there was also a hint of change.
At that time, Rbi governor Shaktikanta Das had said that Inflation is not a big risk, the central bank is focused on Economic Growth.
Inflation pressure is expected to continue in the current financial year. According to the RBI, in the financial year 2022-23, the inflation rate is projected to remain at 5.7 per cent. Shaktikanta Das had reported last month that the inflation rate could remain at 6.3%
in the first quarter, 5% in the second quarter, 5.4% in the third quarter and 5.1% in the fourth quarter.
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