look news india
The biggest news of this time related to the country’s economy and the pockets of the general public is coming out from the headquarters of the Reserve Bank of India (RBI). The eyes of crores of loan holders, home buyers and investors of the country are currently fixed on the ongoing very important meeting of the Monetary Policy Committee (MPC) of the Central Bank. The results of this three-day diplomatic meeting and the final decision on interest rates (Repo Rate) will be officially announced by the RBI Governor on Friday morning. Market veterans and diplomatic analysts are constantly speculating whether this time the general public will get relief from expensive home and car loan EMIs or whether the wait is going to be longer.
First possible decision: No change in repo rate and status quo
According to economic analysts and market experts, it is most likely that the Reserve Bank will not make any changes in the interest rates this time too and will keep the repo rate at its current level. Although the retail inflation rate in the country seems to be coming under control, but in view of the continuous fluctuations in the prices of food items, RBI may adopt a diplomatic stance. If this happens, it will simply mean that there will be no reduction in your home loan or car loan EMI for now and it will continue as it is.
Second possible decision: Start of rate cut
If the Reserve Bank decides to give a faster pace to the country’s economic growth rate (GDP Growth), then it can surprisingly announce a cut in the repo rate by 0.25 percent (25 basis points). The market has been expecting this historic decision for a long time. If the Governor approves this decision on Friday, then the way for loans to become cheaper in the banking sector will be completely cleared. After this, all government and private banks will reduce their interest rates, due to which the monthly EMI burden of the common man will reduce to a great extent and buying a new house and car will become cheaper.
Third possible decision: Taking a tough stance and increasing the repo rate.
Although the possibility of this decision is very less, but considering the diplomatic conditions of international markets, rise in crude oil prices and global uncertainties, the Reserve Bank can also take the drastic step of increasing interest rates marginally to completely crush inflation. If such an unexpected decision comes out, it will prove to be a big blow to both the stock market and the general public. Immediately after this, banks will have to make their loans expensive, which will increase the burden of EMI on your pocket and there may be a shortage of liquidity in the market.
Fourth possible decision: Changing the policy stance
RBI can change its diplomatic stance i.e. ‘Withdrawal of Accommodation’ to ‘Neutral’ while keeping the interest rates stable. This means that the central bank is indicating to reduce rates in future. The effect of this decision will be that even if your EMI does not reduce immediately, there will be full guarantee that the loan will be cheaper in the coming few months. This will also be a diplomatic signal for fixed deposit (FD) investors to book long term FDs immediately to take advantage of the high interest rates currently available.
