The Reserve Bank of India on Wednesday increased the repo rate by 25 basis points to 6.5%. The decision was announced by RBI Governor Shaktikanta Das as part of RBI Monetary Policy statement.
This was the sixth straight hike to the repo rate, which, in December last year, was raised by 35 basis points to 6.25%.
Here’s a look at repo rate hikes by the RBI since May 2022
With the current hike, lending rates of banks are expected to go up. EMIs on vehicles, home, and personal loans will also rise. The marginal cost of funds-based lending rates (MCLR) are also expected to move up, which will help in moderating inflation.
With the latest repo rate hike, experts feel the EMIs may go up by approximately 2 to 4 per cent.
With the hike in repo rate, the standing deposit facility (SDF) rate now stands at 6.25%; and the marginal standing facility (MSF) rate and the Bank Rate at 6.75%.
The central bank has projected GDP growth for the next fiscal (FY 2023-2024) at 6.4 per cent. The MPC had slashed the GDP forecast for fiscal 2023 to 6.8 per cent in the December policy review from an estimate of 7 per cent earlier.
RBI has lowered the inflation target for FY23 from 6.7 per cent to 6.5 per cent. The level is still much above the RBI’s comfort level of 4 per cent. Inflation is expected to be 5.3 per cent in FY24.
RBI will launch a pilot project on QR code-based coin vending machines in collaboration with some leading banks in 19 locations in 12 cities. RBI Governor Shaktikanta Das said this will enhance the ease of access to coins.
RBI has proposed to extend the UPI facility to inbound travellers for merchant payments and would start the services with travellers from G20 countries. The facility will be extended to travellers from G20 countries arriving at select international airports.