The Reserve Bank of India’s (RBI) monetary policy committee on Wednesday decided to hike the repo rate by 25 basis points to 6.5 per cent. This is the second consecutive time the committee has raised the repo rate in an effort to contain early warning signs of inflation.
The RBI also adjusted its inflation projections for the second-half of 2018-19 to 4.8 per cent from the 4.7 per cent it had predicted in its June meeting. RBI Governor Upen Patel said consumer inflation had been above four per cent for some time and the RBI wanted to maintain the inflation target of four per cent on a durable basis, explaining its decision to increase the repo rate.
For those who have taken loans from banks, the RBI’s latest development has come as bad news. The move will lead to an increase in the interest customers pay on home loan, car loan and personal loan.