[ad_1]
RBI MPC June 2023 Meeting: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) retained the order of keeping the interest rates stable in the current financial year as well in the June meeting. In the meeting that lasted for three days, the committee decided not to increase the repo rate again. In this way the repo rate is still 6.50 percent only. Reserve Bank Governor Shaktikanta Das (RBI Governor Shaktikanta Das) informed about the major decisions after the MPC meeting on Thursday.
There was no change even in April
The RBI governor told that the members of the Monetary Policy Committee have decided to keep the repo rate stable. Earlier in the month of April, the first meeting of the Monetary Policy Committee of the Reserve Bank was held and in that meeting also it was decided to keep the policy rates stable. Before that, RBI had continuously increased the repo rate to control inflation.
rapid year-on-year growth
The increase in interest rates started in the month of May last year. Then the Reserve Bank MPC had decided to increase the repo rate by holding an emergency meeting. In May 2022, RBI changed the repo rate after a long gap. To control inflation, the Reserve Bank increased the repo rate 6 times from May 2022 to February 2023 and thus it increased to 6.50 percent.
Due to this interest started increasing
The Monetary Policy Committee decides on the interest rate keeping in mind the Retail Inflation and GDP Growth Rate. Before May 2022, keeping in view the adverse conditions arising due to the Corona epidemic, the Reserve Bank had earlier brought the repo rate to a lower level, so that the country’s economic growth could be supported. However, later, after retail inflation became uncontrollable and the Federal Reserve in the US raised interest rates, the Reserve Bank also had to take a decision to increase the repo rate.
This is how inflation was controlled by the repo rate
In May 2022, when the Reserve Bank started increasing the repo rate, retail inflation in the country had reached 7.8 percent. Retail inflation touched this level in April 2022, after which the repo rate increase started from May 2022. As the interest rates started increasing, the inflation rate started being controlled. Retail inflation remained around 7 percent till August 2022, then came down to 5.7 percent in December 2022.
Retail inflation is so much now
Just in April 2023, retail inflation had come down to 4.7 per cent, which is the lowest in 18 months. Retail inflation is expected to come down to a 25-month low in May. It is being said in the estimates that in May 2023, the retail inflation rate may come within the target of 4 percent of the Reserve Bank after a long time.
This is how banks interest is decided
The repo rate of the Reserve Bank is also called the key policy rate. The reason for this is that according to this banks decide the loan rate and deposit rate. Actually repo rate is the rate on the basis of which banks borrow from the Reserve Bank. In this way, the cost of funding for banks is decided by the repo rate itself. If the repo rate increases, then the cost of capital for the banks increases. In such a situation, banks start increasing the interest on the loan.
Relief is going to come from EMI
At the same time, when the repo rate softens, banks start reducing interest. Now when the Reserve Bank has kept the repo rate constant since the April meeting, many banks have started reducing interest rates. The external benchmark to which bank loans are linked is based on the repo rate. Now that the Reserve Bank’s stance has started softening, interest rates ranging from home loans to personal loans and car loans may come down in the coming times. On the other hand, the burden of EMI can be reduced on those who already have a home loan.
read this also: There will be a change in the rules of withdrawal from NPS, instead of lump sum, you will be able to withdraw money in installments.
[ad_2]
Source link