TLI Staff
New Delhi: On expected lines, Reserve bank of India (RBI) on Wednesday raised policy repo rate by another 25 basis points (0.25%) to 6.50% to contain inflation. The increase in repo rate is set to push EMIs up for various loans such as car loan, home loan and personal loan.
The cash outgo on account of higher repo rate would go up for both retail and business loans.
Announcing the decision of Monetary Policy Committee(MPC) or rate-setting panel, RBI Governor Shaktikanta Das said that the MPC met on February 6-8 and based upon the macroeconomic situation and its outlook decided by a majority 4 members out of 6 to increase the policy repo rate by 25 basis points with immediate effect.
“Consequently, the standing deposit facility (SDF) will stand revised to 6.25% and the marginal standing facility (MSF) rate and the ban rate to 6.75%. The MPC also decided by a majority of 4 out of 6 members to remain focussed on withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth,” Das said.
The RBI has increased FY23 gross domestic product (GDP) growth estimate to 7% from 6.8% estimated earlier.
The central bank has projected FY24 GDP growth rate at 6.4%.
While announcing the MPC decision, Governor Das said that the central bank is maintaining strong vigil on evolving economic situation.
Referring to Covid year and the subsequent war in Europe triggering sharp increase in global commodity prices, Das noted that unprecedented events of last few years had put monetary policy to test.