look news india
Mumbai: At the end of the meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India after the results of the Lok Sabha elections, the MPC decided to maintain the repo rate at 6.50 percent as expected. The MPC has kept interest rates unchanged for the eighth consecutive meeting. The Reserve Bank will continue to focus on inflation amid strong economic growth.
It is believed that the situation will be favourable for the new government at the Centre to push forward the reforms while keeping the interest rates unchanged.
Home, auto and other loan holders will not get any relief in the current equated monthly installments (EMI-loan installments) unless the rate is reduced. At the end of the three-day meeting, the Reserve Bank has raised the economic growth forecast for the current financial year while maintaining inflation expectations.
Reserve Bank Governor Shaktikanta Das said in a statement issued after the meeting, four out of six members of the MPC voted in favor of keeping the repo rate unchanged. Two members supported a five percent cut in the repo rate. MPC members are also divided over the repo rate. In the earlier meeting, the external member of the committee, Jayant Verma, had proposed a five percent cut in the repo rate, now another member Ashima Goyal has also joined him.
The repo rate remains at 6.50 percent since April 2023. Earlier, from May 2022, the total repo rate was increased by two and a half percent.
From October 1, 2019, banks have linked every retail floating-rate to an external benchmark. The repo rate is the benchmark rate for most banks. Therefore, any change in the RBI's repo rate has a direct impact on bank loan rates. Borrowers will have to wait longer for a reduction in EMIs as the MPCA has not changed the repo rate for the eighth consecutive time.
The Reserve Bank will continue to monitor inflation amid the forecast of a normal monsoon in the current year. Although economic growth has helped reduce inflation without any pressure, inflation will remain under surveillance. The Reserve Bank has raised the economic growth rate forecast for the current financial year from seven percent to 7.20 percent. Inflation expectations of 4.50 percent have been maintained.
The inflation situation was considered in today's meeting. Inflation remained high at 4.83 percent in April, which is believed to have kept interest rates on hold. Das said, “When we see that inflation will remain at four percent for a long time, we will consider easing monetary policy.”
