Repo Rate Hiked: RBI increased the repo rate by 0.40%, interest on FD may increase, loan EMI will be expensive

RBI Governor Shaktikanta Das on Wednesday announced an increase of 40 basis points in the repo rate. RBI Governor informed that the monetary policy committee of the central bank has unanimously voted to increase the repo rate by 40 bps.

Rate has gone up to 4.4%. This increase in the repo rate is expected to increase the EMI of home loans, car loans and personal loans. The CRR has also been increased by 50 basis points. After the hike in the repo rate, the Sensex has registered a fall of more than 1,300 points.

The RBI governor has talked about the focus on controlling inflation. His statement comes at a time when global inflation is posing a challenge to India's recovery. The US Federal Reserve may increase the key interest rate by 50 basis points to control the record inflation. Due to the news of the sudden address of the RBI Governor, there was a fall in the stock markets.

The RBI governor in April's monetary policy review had revised inflation forecast for FY2023 to 5.7 per cent and kept the economic growth rate at 7.2 per cent. Due to this, in the last monetary policy review, the RBI had indicated to focus on inflation rather than growth. High global crude oil prices as well as Indonesian restrictions on palm oil exports are making it difficult for India to contain inflation.