In its first Monetary Policy statement of 2023, the Reserve Bank of India (RBI) on Wednesday hiked the policy repo rate by 25 basis points to 6.5%. This was the sixth straight hike to the repo rate, which, in December last year, was raised by 35 basis points to 6.25%.
The RBI on Wednesday increased repo rate by 25 bps to 6.5%. (HT_PRINT)
The decision to raise the repo rate was approved by a 4-2 majority by the central bank's Monetary Policy Committee (MPC), said RBI governor Shaktikanta Das, who announced decisions made by the committee, which met for three days starting February 6.
But, how does repo rate increase the common man? Here's how:
Loan EMIs to rise: The rise in repo rate – it is the interest rate charged by RBI when commercial banks borrow from it – will have a direct impact on loan borrowers and bank depositors. Now, banks too will raise the interest rate on retail loans, and usually also increase the tenure of the loan; the higher the remaining tenure of the loan, the higher the EMI.
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