Lagatar24 Desk
New Delhi, June 8: The Reserve Bank of India raised the repo rate by 50 basis points to 4.90 percent on Wednesday. While inflation is expected to be 6.7% in the fiscal year 2022-23, the RBI is optimistic that the economy would grow at 7.2 percent in the current fiscal year. After a three-day meeting of the Monetary Policy Committee, RBI Governor Shaktikanta Das announced the decisions (MPC).
To combat increasing inflation, the MPC hiked the main policy rate (repo) by 40 basis points to 4.4 percent last month. It was the first rate increase since August of last year.
The repo rate, also known as the repurchasing option rate, is the interest rate at which the Reserve Bank of India lends money to commercial banks. The repo rate is seen as a crucial tool in the fight against inflation.
Following the RBI’s decision to raise the repo rate once more, all banks will raise lending interest rates. As a result, housing and auto loans are projected to grow more expensive.
Banks will have to set interest rates for different sorts of consumers based on the MCLR for the unbanked (marginal cost of funds based lending rate). Banks modify the MCLR on a monthly basis, taking into account the repo rate and other lending rates.
