Monetary Poliy Review: 50 BPS Repo Rate Hike, Low GDP Forecast, Inflation Outlook Retained
STORIES, ANALYSES, EXPERT VIEWS
The Monetary policy Committee (MPC) Friday raised the benchmark lending rate by 50 bps to 5.9%, the fourth consecutive rate hike after a 40 bps increase in May and 50 bps hike each in June and August.
RBI has now hiked the benchmark rate by 190 basis points since May 2022.
The standing deposit facility (SDF) rate and the marginal standing facility (MSF) rate stand adjusted to 5.65% and 6.15%, respectively.
All members of thee MPS, except one, voted to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward.
As per expectations: “Markets were largely expecting the 50 bps rate hike today due to a troika of factors – sticky, above-target inflation, stable growth prospects, and currency depreciation triggered by expectations of further frontloaded rate hikes by DM central banks,” said Aurodeep Nandi, India Economist, Nomura.
With a hike in repo rate, EMIs for home, car and personal loans are also likely to go up. Home, car and personal loans will become more expensive as the cost of borrowing will go up for banks, leading to a rise in lending rates.
