RBI meeting started from today: may be announced to increase interest rate by 0.50%
RBI meeting started from today: may be announced to increase interest rate by 0.50%, so far this year has increased by 1.40%
The monetary review policy meeting of the Reserve Bank of India (RBI) has started from today, i.e. on September 28, which will continue till September 30. After this, RBI will announce the credit policy on 30 September. According to experts, an increase in the repo rate may be announced in the meeting of the RBI Monetary Review Policy. It is expected that RBI can increase the repo rate by up to 0.50%. At present, the repo rate is 5.40%.
Concerned about rising inflation, RBI had increased the repo rate by 0.40% in May, 0.50% in June and 0.50% in August. In this way, RBI has increased the repo rate by 1.40% since May.
The Repo rate is the rate at which loans are given by RBI to banks. Banks give loans to customers from this loan. A lower repo rate means that many types of loans from the bank will become cheaper, whereas the reverse repo rate is the exact opposite of the repo rate.
The reverse rate is the rate at which interest is received from RBI on deposits made by banks. Liquidity, that is, cash, is controlled in the markets through the reverse repo rate. The repo rate being stable means that the loan rates from banks will also remain stable.
When RBI reduces the repo rate, banks also reduce the interest rates most of the time. That is, the interest rates of loans given to customers are low, as well as the EMI also decreases. Similarly, when there is an increase in the repo rate, the loan becomes costlier for the customer due to the increase in interest rates. This is because commercial banks get money at higher prices than RBI, which forces them to raise rates.