The results of the three-day Monetary Policy Committee (MPC) headed by Reserve Bank Governor Shaktikanta Das came to the fore on Wednesday morning.
Governor Das told that in view of the pressure of inflation, once again the repo rate is being increased by 0.35 percent. With this decision, all types of loans including home, auto, personal will become expensive in the coming times.
The Reserve Bank today increased the repo rate for the fifth time in a row. For the first time this year, the repo rate was increased by 0.50 percent in May. Since then, till now the repo rate has increased by 1.90 percent. Before today’s hike, the effective repo rate stood at 5.90 per cent. Now the effective repo rate of the Reserve Bank has become 6.25 percent. Repo rate is the rate at which the Reserve Bank lends to other banks. It is obvious that if it will be expensive for the banks to take loan from RBI, then the banks will pass its burden on the common man as well.
Earlier, the Reserve Bank had made a big cut in the repo rate to reduce the debt burden during the Corona period and to give relief to the common man. Then the repo rate was reduced by about 2.50 percent to 4 percent. After the Corona period, now the Reserve Bank has started increasing the repo rate again. The biggest reason for this is the pressure of inflation. The rate of retail inflation had reached 7.4 per cent in September, which has come down slightly to 6.7 per cent in October. This is the reason that this time also the RBI has increased the repo rate less than before.
4 out of 6 voted for increasing the repo rate Out of 6 members present in the MPC meeting, 4 voted in favor of increasing the repo rate. He believed that it is necessary to keep the interest rates high until inflation comes under control. The target of the MPC is to bring down core inflation and it will be reviewed further. It is estimated that the retail inflation rate will remain above 4 percent for the next 12 months.
Growth rate estimate also reduced
Due to rising inflation and decline in consumption, the Reserve Bank has also had to reduce the growth rate estimate. The Reserve Bank had earlier estimated the growth rate for the current financial year at 7 per cent, which has now been reduced to 6.8 per cent. The recently released second quarter growth figures have also been sluggish. The growth rate in the second quarter was 6.3 per cent, which went up from 13 per cent in the first quarter.
