After the monetary policy meeting held on the 8th of June,2022, The Reserve Bank of India (RBI) has come up with the decision to increase the repo rate again by 0.5% to 4.9%.
The repo rate has risen 90 basis points in the last five weeks as the RBI strives to combat inflation with rate hikes and focus on exiting its accommodative stance.
During the previous meeting held in the month of May, it was agreed that there will not be changes made any further after a 0.4% rise in the repo rates; which changed the rate from 4.0 to 4.4%.
Since the last increase banks had already risen the rates but due to the new change interest rates father goes higher.
This change will increase the tenure for EMI payment in most cases by the banks. The best that we can do is pay back the loan as soon as possible with surplus amounts.
A slight increase in the repo rate increases the cost of borrowing from commercial banks. The rate increase has an impact on a variety of loans, including those for cars, homes, education, personal or business loans, credit cards, and mortgages.
The average person is deterred from making pointless purchases as borrowing costs rise, which lowers the demand for products and services. This starts a domino effect that lowers prices and, as a result, inflation.
