Mumbai If you have taken a loan and are hoping that you will get relief from increasing EMIs, then this does not seem to be happening at the moment. The reason for this is the inflation rate. The inflation rate released by NSSO for the month of October is 6.21 percent. That is, more than the level given by the government to the Reserve Bank i.e. RBI. When the inflation rate is more than a certain level, RBI is unlikely to reduce the repo rate and failing this, your loan EMI is also not going to reduce.
The government has set the inflation limit at 4 percent. In this, 2 percent more or less can be accepted, but the latest inflation rate has crossed the maximum limit of 6 percent. If the inflation rate comes between 4 to 5 percent by February 2025, then you can expect the RBI to reduce the repo rate and then the EMIs will also reduce. If the inflation rate remains at 6 percent or increases further, then far from reducing the EMI on the loan, it may even increase. The inflation rate in August this year was 3.65 percent. Whereas, in September it again increased to 5.58 percent. As a result, RBI had decided to maintain the repo rate at 6.50 percent in the MPC meeting held recently.
After the war between Russia and Ukraine started in February 2022, inflation started appearing all over the world. Inflation also increased in India. To stop this, the Reserve Bank i.e. RBI started increasing the repo rate. With the increase in repo rate, the EMI of the borrowers also increased. In May 2022, the inflation rate had reached 7.80 percent. At that time the repo rate was 4 percent. As inflation continued, RBI started increasing the repo rate after every MPC meeting and in February 2023, it was increased to 6.50 percent.
