What is Repo Rate: RBI Governor Shaktikanta Das on Friday gave information about the three-day MPC meeting that started on June 5. He said that for the eighth consecutive time, the central bank did not make any change in the repo rate.
RBI Repo Rate: Reserve Bank of India (RBI) Governor Shaktikanta Das gave information about the decisions taken in the three-day bi-monthly monetary policy committee. RBI did not make any change in the repo rate for the eighth time in a row and maintained the policy rate at 6.5 percent. Das said that during the MPC meeting it was decided not to make any change in the repo rate. The central bank last raised the repo rate to 6.5 percent in February 2023.
RBI expressed concern over the high level of inflation
RBI Governor Shaktikanta Das said that no change was made in the interest rate. The repo rate has been retained at the old level of 6.5%. 4 out of 6 members of MPC were not in favour of changing the rates. He said that we are working towards making the Reserve Bank a model central bank in the ‘Global South’. The inflation growth balance is moving favorably. RBI expressed concern over the high level of food inflation rate.
Repo rate remains at 6.5 percent from February 2023
The decision taken by the RBI will not have any effect on the EMI of your home loan. That is, you will have to pay the same EMI in the coming month, as much as you are paying now. Amidst concerns about inflation, it was already expected that the central bank would not make any change in it. The repo rate has remained at 6.5 percent since February 2023. According to the SBI Research report, inflation is expected to be at 5 percent in the month of May, its figures will come in the second week of June. Earlier in April, the retail inflation rate was 4.83 percent.
RBI Governor Shaktikanta Das says “The policy repo rate remains unchanged at 6.5%” pic.twitter.com/jWtqCxS3dC
— ANI (@ANI) June 7, 2024
Meeting is held 6 times a year
The monetary policy meeting is held 6 times every year by the central bank. This was the second MPC meeting of the financial year 2024-25. In this meeting, the repo rate is reviewed by the Reserve Bank keeping in mind the inflation rate. Before taking any decision on this, RBI keeps in mind many factors like demand, supply, inflation and credit.
Expectation of reduction in October
After June, the next MPC meeting will be held in the first week of September. There is little hope of a reduction in the repo rate in the next meeting as well. At present, the inflation rate is running outside the range set by the government. The government has given the Reserve Bank the target of bringing the inflation rate between 2 to 4 percent. Experts hope that the repo rate can be cut by the RBI in the third quarter of the financial year 2025.
What is the effect on you?
The effect of reducing or increasing the repo rate by the RBI affects the interest rate of the loan given by the banks. After the increase in the repo rate, all types of loans including home loans, auto loans and personal loans are made expensive by the banks. In simple words, banks increase the interest rate. But if RBI cuts the repo rate, then the interest rate of the loan decreases.
What is repo rate?
The rate at which RBI gives loans to banks is called repo rate. Increasing the repo rate means that banks will get loans from RBI at a higher rate. This will increase the interest rate of home loans, car loans and personal loans etc., which will have a direct impact on your EMI.
