RBI Monetary Policy Meeting Update: If you have taken a home loan or plan to do a bank FD, then a big decision is going to be taken on this today. Yes, today is the last day of the three-day monetary policy meeting of the Reserve Bank of India (RBI). Based on the decisions taken in this meeting, it will be announced today whether the EMI of your loan will decrease or the interest on FD will increase. RBI Governor Shaktikanta Das will announce the bi-monthly monetary policy on Friday. Amid concerns over inflation, the repo rate is likely to remain at the old level. RBI has not made any change in the repo rate since February 2023 and it remains at 6.5 percent. On the other hand, the European Central Bank and the Bank of Canada have started cutting the key policy rate. After the deliberations of the RBI’s Monetary Policy Committee (MPC), Das will inform about the decision at 10 am. The three-day meeting of the MPC began on Wednesday (5 June). Experts said that since economic growth is picking up, there is little hope of MPC cutting the repo rate. According to the SBI Research report, the Consumer Price Index based inflation rate is expected to be 5 percent in May (the figure will come in the second week of the month). Retail inflation was 4.83 percent in April.
Repo rate cut expected in October
The next MPC meeting after June will be held in the first week of September. There is little hope of a repo rate cut in the next meeting as well. At present, the inflation rate is running outside the range set by the government. The government has given the Reserve Bank the target of bringing the inflation rate between 2 to 4 percent. Experts hope that the repo rate can be cut by RBI in the third quarter of the financial year 2025.
Meeting is held 6 times a year
The central bank holds monetary policy meeting 6 times every year. This is the second MPC meeting of the financial year 2024-25. In this meeting, the repo rates are reviewed by the Reserve Bank keeping in mind the inflation rate. Before taking any decision on this, RBI keeps in mind many factors like demand, supply, inflation and credit.
What is the effect on you?
The effect of increasing or decreasing the repo rate by RBI affects the interest rate of the loan given by the banks. After the increase in the repo rate, all types of loans including home loan, auto loan and personal loan are made expensive by the banks. In simple words, the bank increases the interest rate. But if RBI cuts the repo rate, it reduces the interest rate of the loan.
What is repo rate?
The rate at which loans are given to banks by RBI is called repo rate. Increasing the repo rate means that banks will get loans from RBI at a higher rate. This will increase the interest rate of home loans, car loans and personal loans etc., which will have a direct impact on your EMI.
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