RBI Hike Repo Rate: Reserve Bank of India (RBI) has announced to increase the repo rate. The central bank has increased the repo rate by 40 bps to 4.40% from the earlier 4%. Earlier, the last time the repo rate was cut in May 2020 and since then there has been no change in it continuously. After two years, now the RBI has increased the repo rate.
Now the repo rate has gone up to 4.4%. Apart from this, the cash reserve ratio (CRR) has also been increased by 50 basis points, which will put further pressure on interest rates. After this decision of RBI, where it will be costly for common people to get a house or a car, those investing in fixed deposits ie FD can get big benefits.
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EMI will be expensive then interest on FD will increase
EMI will be affected due to increase in repo rate. Home loans, car loans and personal loans will become expensive. At the same time, FD investors can expect better returns on new FDs. Let us tell you that the repo rate means the rate at which the Reserve Bank gives loans to other banks. On this basis, the bank gives loans to its customers. A lower repo rate means that customers will get the loan at a lower price and an increase in the repo rate means that now the loan will become expensive. Along with this, the interest rates of FD will also increase, in such a situation, those who make FD will get more interest than before.
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Why was the decision taken
RBI had acknowledged inflation as a major challenge in its monetary review meeting in April. If we look at the figures of the last few months, then this is a big challenge, which remains at the upper level of 6%. India’s retail inflation hit a 17-month high in March, official data shows.