Business Standard - Shares of rate sensitive sectors like banking, automobiles and realty traded mixed on Wednesday after the Reserve Bank of India (RBI) Governor Shaktikanta Das announced repo rate hike by 25 basis points, thus taking the key benchmark interest rate to 6.5%. Read more
The Monetary Policy Committee (MPC) of the Reserve Bank of India on Wednesday hiked the key policy rate, the Repo rate or the rate at which the RBI lends funds to banks, by 25 basis points to 6.50% in a bid to rein in retail inflation.
Impact of this hike - Lending rates of banks are expected to go up as the cost of funds is expected to rise further. EMIs on vehicles, home and personal loans will also rise.
The external benchmark linked lending rate (EBLR) of banks will rise by 25 bps - one basis point is one-hundredth of a percentage point - as such loans are linked to the Repo rate.
Marginal cost of funds-based lending rates (MCLR), which accounts for 49.2% of the loans portfolio of banks, are also expected to move up. The hike will help in moderating inflation in the country.
Growth projection - The RBI has projected GDP growth for the next fiscal (FY2024) at 6.4%. The MPC had slashed the GDP growth for fiscal 2023 to 6.8% in the December policy review from an estimate of 7% earlier as risks continue to emanate from protracted geopolitical tensions, global slowdown and tightening of global financial conditions.
Inflation forecast - The Central bank has lowered the inflation target for FY23 from 6.7% to 6.5%, which is still above the RBI's comfort level of 4%. Inflation is expected to be 5.3% in FY24.
Comments
Write Comment