State Bank of India has said in its special report that the repo rates are set to increase by 0.50 percent. It has said that the top repo rate will go up to 6.25 per cent and the final hike will be 0.35 per cent in December’s policy review.
Repo rate hike possible on Friday
Reserve Bank of India (RBI) soon to deal with inflation repo rate enhancer. Following the path of other central banks of the world including the US Federal Reserve, the Reserve Bank of India may increase interest rates for the fourth consecutive time on Friday. RBI has increased the repo rate by 1.40 percent since May to control inflation. During this period, the repo rate has increased from four percent to 5.40 percent. The Monetary Policy Committee (MPC) may decide to increase the repo rate by 0.50 percent on 30 September. If this happens, the repo rate will increase to 5.90 percent. This will make the loan costlier and the EMI of the loan will increase.
The repo rate was increased by 0.40 percent in May and by 0.50-0.50 percent in June and August. Retail inflation based on the Consumer Price Index, which started moderating from May, reached 7 per cent in August. RBI takes into account retail inflation while formulating its two-year monetary policy.
Rate hike on 30th September
The three-day meeting of the Monetary Policy Committee, headed by the Governor of RBI, will begin on Wednesday and the decision on rate changes will be given on Friday, 30 September. Madan Sabnavis, Chief Economist at Bank of Baroda said that inflation is going to remain around 7 percent and in such a situation, rates are bound to increase. An increase of 0.25 to 0.35 per cent in the repo rate means that the RBI is confident that the worst phase of inflation is over. At the same time, in view of the recent developments in the foreign exchange market, rates can also be increased by 0.50 percent.
Home loan will be expensive
RBI’s job is to ensure that retail inflation remains at 4 per cent (up or down two per cent). Dhruv Aggarwal, Group CEO, Housing.com, said high inflation is a major cause of concern for the RBI and banks will increase interest rates on their home loans due to the rate hike. However, we believe that it will not have much impact as the demand for the property remains. Rather, the demand is going to increase during festivals.
State Bank of India had said in its special report that an increase of 0.50 percent is fixed in the rates. It had said that the top repo rate would go up to 6.25 per cent and the final hike would be 0.35 per cent in the December policy review. This means that not only will the repo rates increase in September, after that interest rates are likely to increase in December also. In this way, customers are not going to get rid of expensive loans until the inflation rate is brought under control. Even in the festive season, common people will have to face inflation.
Source: www.tv9hindi.com”