INSUBCONTINENT EXCLUSIVE:
This the 1st time since October 2013 that repo rate has been hiked at 2 consecutive RBI policy meetings.The Reserve Bank of India (RBI) on
Wednesday announced a second straight 25 basis points hike in repo rate to 6.5 per cent
This the first time since October 2013 that the central bank has hiked borrowing costs at two consecutive policy meetings
Five of the six members on the rate panel voted for a rate increase
The RBI cited rising crude oil prices, volatility in global financial markets, and uncertainty around the full impact of MSP (minimum
support price) on inflation among the key factors for its rate-hike decision in its third bi-monthly monetary policy review."The main reason
for changing the policy rate is to ensure that, on a durable basis, we come to and maintain the 4 per cent (inflation) target
We have been away from the 4 per cent number for several months now," said RBI Governor Urjit Patel in a press conference after the
announcement of RBI Policy.However, the monetary policy committee maintained its stance at neutral.The reverse repo rate or the rate at
which RBI borrows from commercial banks stands adjusted to 6.25 per cent.In June, the repo rate, or the benchmark lending rate, was raised
for the first time in over four years, by 25 basis points to 6.25 per cent.Borrowers can expect further rise in loan costs after the latest
"Loans will get marginally costlier
1 lakh for 20 years at an interest rate of 8.5 per cent, the EMI is Rs
If the rate rises to 8.75 per cent, the EMI increases to 884
If the interest rate reaches 9 per cent, the EMI becomes Rs
In a rising rate scenario, it makes immense sense for customers repaying loans to make periodic principal pre-payments," said Adhil Shetty,
CEO, BankBazaar.com.Experts were surprised with RBI's neutral stance
"The hike was expected, but what is surprising is the stance has remained 'neutral'
We were expecting that since this is the second consecutive hike in two policies, the stance would be changed to 'tightening'," said Anagha
Deodhar, Economist, ICICI Securities.RBI projected inflation at 4.6 per cent in second quarter of fiscal 2019, 4.8 per cent in second half
of 2018-19 and 5 per cent in first quarter of 2019-20
In June, RBI had projected consumer inflation at 4.8-4.9 per cent in the first half and 4.7 per cent in the second half of 2018-19.Annual
consumer inflation hit 5 per cent in June, the eighth straight month it topped the RBI's medium-term 4 percent target.The RBI panel retained
GDP growth projection for 2018-19 at 7.4 per cent, ranging between 7.5-7.6 per cent in for April-September and 7.3-7.4 per cent in second
half of fiscal 2019.HRA revision by the state government is another item on the RBI's radar.Thirty-seven of 63 economists in a Reuters poll
last week said the RBI will raise rates, while 22 said the next hike would come later this year, or early in 2019
