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There is no hope of getting relief from the skyrocketing inflation. Inflation will continue to take a hit till the first half of the current financial year in view of the rise in crude oil prices in the international market, increase in repo rate, rising prices of wheat and other food items. During this, not only the prices of petrol and diesel will increase, but more EMI will have to be paid than before. However, the government and RBI have taken several steps to provide relief to the common people from inflation.
EMI: Repo rate will increase again, loan will be more expensive
The three-day meeting of RBI’s Monetary Policy Committee (MPC) has started from Monday. Its decisions will come on Wednesday, in which the repo rate can be announced again by 0.35-0.40%. If this happens, different types of loans will become expensive. This will affect the monthly installment (EMI) of the people. They will have to pay more EMI than before. Experts believe that with retail inflation hitting an 8-month high in April and wholesale inflation remaining in double digits for 13 months, the RBI has limited options to raise interest rates.
Shanti Ekambaram, Group President (Consumer Banking), Kotak Mahindra Bank said, “MPC may increase by 0.35-0.50 per cent in this meeting in times of rising inflation.” Keeping in view the prices of petroleum and commodities, the overall increase in the repo rate is expected to be from one to 1.5 per cent.
Crude oil: Saudi Arabia made a historic increase in the price
Saudi Arabia, the world’s largest oil producer, has raised the price of crude oil for Asian countries by a historic $ 6.50. After this, Brent crude prices rose 0.3% to $ 102.04 per barrel in the global market. US benchmark WTI crude rose 0.3% to a three-month high of $119.27 a barrel.
In fact, Saudi Arabia has increased the July price of crude oil (Arab Light Crude) by $ 6.50 for Asian countries. Due to this, crude oil prices in the global market reached the highest level since May.
- The effect of increase in prices will be reflected in the domestic market as India buys 35-39% crude oil from Saudi Arabia.
- OPEC countries have agreed to increase oil production by 6.48 lakh barrels per day for July and August. It doesn’t seem to have an effect on prices at the moment.
Wheat: rising prices in the global market
The United Nations Food Agency says that production in Ukraine after the ban on India’s exports and Russia’s aggression has increased the prices of wheat in the global market. The Price Index of Food and Agriculture Organization (FAO) averaged 157.4 points in May 2022, an increase of 22.8% over May last year. The effect of increase in global prices will also be reflected in the domestic market. This will not only make the flour expensive, but the prices of the products made from it will also increase.
Canara and Karur Vysya Bank also gave a blow
Canara Bank and Karur Vysya Bank have made loans expensive. Canara Bank has increased the marginal cost of funds based lending rate (MCLR) by 0.05 per cent to 7.40 per cent for a period of one year. MCLR has been increased from 7.30 per cent to 7.35 per cent for a period of six months. The new rates are effective from June 7.
- Private sector Karur Vysya Bank has increased the benchmark based lending rate (BPLR) by 0.40 per cent to 13.75 per cent and base rate by 0.40 per cent to 8.75 per cent. BPLR is the old standard of lending before the MCLR regime.