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RBI increases repo rate by 0.25 percent, EMI of home loan will increase

Governor of the RBI Shaktikanta Das has begun his news conference. There has been a 0.25 percent increase in the repo rate by the RBI. The repo rate has gone up to 6.50% from 6.25%.

This is the sixth time the central bank has raised the repo rate. Following that, Shaktikanta Das made these comments in a media interview to provide information on the meeting and the decisions made at that time.

RBI Governor Shaktikanta Das announces that RBI increases the repo rate by 25 basis points to 6.5% pic.twitter.com/2ZyUSbCxEO
— ANI (@ANI) February 8, 2023

EMI of home loans will increase

The central bank’s decision will result in an increase in the house loan‘s EMI. The EMI for a home loan, a car loan, and a personal loan will all be more expensive as a result of the hike in the repo rate. Inform them that the repo was 4% in May 2022 and is currently 6.5%.

RBI governor said

The RBI governor stated that with major nations’ growth prospects improving and inflation levels declining, the prognosis for the world economy is not as bleak as it was a few months ago. However, major economies continue to experience inflation that is beyond the target. According to the governor of the RBI, the annual inflation rate may stay at 5.6% in the final three months of the fiscal year. In the first quarter of FY24, the RBI governor expects the consumer price index to rise by 5%.

Inflation has come down since two months, hope of getting relief from rising home loan and EMI

The inflation rate in India has been falling over the past two months. The cycle of policy rate increases is set to come to a stop as November’s retail inflation rate dropped to 5.88%. In research released on Monday, economists from SBI, the largest bank in the nation, provided this information.

The RBI is in charge of controlling inflation between 2 and 6 percent. According to economists, the retail inflation data for November is positive for putting a halt to the cycle of policy rate increases.

The RBI‘s strong monetary policy approach, according to the research, might aid in bringing domestic inflation under control. It has been said that the Federal Reserve, America’s central bank, may need to raise the policy rate until the country’s inflation is under control. This will result in more capital leaving emerging markets. The currency rate will fluctuate, and the value of the rupee will decrease.

However, according to experts, between December 2022 and January 2023, the headline inflation rate might increase once again to 6.5 to 6.7 percent. While it is anticipated to drop further to 5% by March 2023.

Repo rate increased 5 times

To combat inflation, the central bank has raised the policy rate repo by 2.25 percent five times since May. In its monetary policy review from last week, the Reserve Bank forecast that inflation would fall to 6% in the quarter between January and March.

SBI home loans became expensive, Bank hikes the minimum interest rate

State Bank of India, the largest bank in the country, has increased the interest rate on home loans. Starting June 15, the new rates will apply to home loans. MCLR (Marginal Cost of Lending Rate) has been increased by 0.20 percent. It also became effective on June 15. As a result of the Reserve Bank of India‘s increase in repo rates by 50 basis points, the State Bank of India has taken this step.

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According to a report, now the bank has the minimum interest rate on home loans at 7.55 percent. Those with CIBIL scores above 800 will be eligible for a 7.55 percent home loan. People whose CIBIL score is 750-799 will get a loan at 7.65 percent per annum. Similarly, SBI will give home loans at the rate of 7.75 percent to those with CIBIL scores of 700-749 and 7.85 percent to those with 650-699 scores. Similarly, people whose CIBIL score is between 550 to 649, will have to pay interest at the rate of 8.05 for the home loan. These are floating interest rates and they are repo linked.

MCLR also increased

The bank has also increased the one-year benchmark MCLR from 7.20 percent to 7.40 percent. Personal loans, auto loans, and home loans are almost all linked to MCLR. Because of this, if the repo rate changes, then they also do. From June 15, SBI has also increased its Repo Rate Linked Lending Rate (RLLR). Earlier RLLR was 6.65 percent, which has now been increased to 7.15 percent. From June 15, the new rates have become effective.

FD interest rates also increased

Interest rates on SBI fixed deposits maturing within 211 days of less than Rs 2 crores were increased to 3 years on June 14. Fixed deposit interest rates increased by 20 basis points from 4.40 percent to 4.60 percent for 211-day and shorter-term deposits.

Earlier, on FDs ranging from one year to less than two years, where the bank was paying interest at the rate of 5.10 percent per annum to the customers, now it will get 5.30 percent interest. The bank is now paying 5.35 percent interest on fixed deposits maturing in two to three years.