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New Delhi: In a bid to control rising inflation in the country, the Reserve Bank of India (RBI) has hiked the repo rate by 40 basis points to 4.40 percent.
The last time the repo rate was cut was in May 2020 and has been kept unchanged since then.
Apart from the repo rate, the Cash Reserve Ratio (CRR) has been hiked by 50 bps which will exert further upward pressure on interest rates.
''Based on this assessment of the macroeconomic situation and the outlook, the MPC voted unanimously to increase the policy repo rate by 40 basis points to 4.40 percent, with immediate effect,'' the RBI governor said in an official statement on Wednesday.
''Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.15 percent; and the marginal standing facility (MSF) rate and the Bank Rate to 4.65 percent,'' he added.
The MPC also decided unanimously to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.
"Shortages and volatility in commodities and financial markets are becoming more acute," Das said in his address from Mumbai.
"We have demonstrated in the MPC that we are not bound by a set book of rules but be accommodative of changing scenarios," he said.
Earlier, the banker's bank had revised the country's inflation forecast to 5.7 percent in FY23 from 4.5 percent earlier, acknowledging pressures of inflation from crude oil crossing $100 per barrel.
In simple words, the repo rate means the rate of loan given by the Reserve Bank to other banks. The bank provides loans to its customers with this charge. A lower repo rate means that customers will now get cheaper loan rates for loans like home loans and vehicle loans even at lower prices.
If you are planning on taking a loan, then you better do it soon, as the interest rate on loans could start increasing soon.
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