Monetary Policy: Announcement of monetary policy, repo rate increased by 0.50 percent, know the impact on you

Before the Reserve Bank announced its monetary policy today, RBI Governor Shaktikanta Das expressed concern over global inflation. After this, he announced to increase the repo rate by 0.50 percent. The repo rate has now increased from 4.90 to 5.40 percent. Das also said that the committee has taken this decision unanimously.
Your loan EMI will increase

An increase in the repo rate will increase your loan installment. This will also increase the installment of home loan, auto loan and personal loan. If your home loan is of Rs 30 lakh and the tenure is of 20 years, then your installment will increase from Rs 24,168 to Rs 25,093.

Inflation forecast retained at 6.7 percent

Giving information about the decision taken in the three-day meeting of the Monetary Policy Committee (MPC), RBI Governor Shaktikanta Das said, “The MPC has unanimously decided to increase the repo rate by 0.5 percent to 5.4 percent.” That the Indian economy is battling high inflation and it is necessary to bring it under control. “The Monetary Policy Committee has also decided to focus on withdrawing the accommodative policy stance to contain inflation,” Das said. The Reserve Bank retained the inflation forecast for the fiscal year 2022-23 at 6.7 per cent on the basis of a normal monsoon and the possibility of crude oil prices at $105 a barrel.

GDP growth remains at 7.2

Das said the Indian economy is battling high inflation. However, inflation has come down compared to April. Rural demand is showing improvement. GDP growth is expected to be 16.2 percent in the first quarter of FY2023. Despite the challenges, GDP growth remains at 7.2. He said that the Monetary Policy Committee raised the Fixed Deposit Facility (SDF) rate from 4.65 per cent to 5.15 per cent. Adequate capital in the financial sector. The forex reserves are shielding from the impact of global developments.

Let us tell you that the RBI had raised the repo rate twice in the current financial year so far – 0.40 percent in May and 0.50 percent in June to control retail inflation. This is the third time that the repo rate has been increased. Earlier the repo rate was 4.9 percent, which was below the pre-Covid level of 5.15 percent.

Every time during the review of economic policies by the Reserve Bank of India, words like Repo Rate, Reverse Repo Rate and CRR come up, which are a bit difficult for the common man to understand. Let us know in simple language the meaning of Repo Rate, Reverse Repo Rate and CRR and how it affects your life.

Repurchase Rate or Repo Rate

It can be understood in simple language like this. Banks give us loans and we have to pay interest on that loan. Similarly, banks also need a huge amount for their day-to-day operations and they take loans from the Reserve Bank of India (RBI). The rate at which the Reserve Bank charges interest on this loan from them is called Repo Rate.

What is the impact of repo rate on common man

When banks will get loan at low interest rate i.e. repo rate will be low then they can also give cheap loan to their customers. And if the Reserve Bank increases the repo rate, it will become expensive for banks to take loans and they will make loans expensive for their customers.

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