Once again, those hoping that loans would become more affordable and that the EMI load would lessen have been let down. Even in the historic ninth meeting, the Reserve Bank did not lower the repo rate. The monetary policy council of the central bank has once again chosen to maintain the repo rate at its current level, according to Reserve Bank Governor Shaktikanta Das’ statement on Thursday.
Following the meeting, the RBI Governor provided an update.
According to RBI Governor Shaktikanta Das, the central bank’s top worry is continuing inflation. This is the rationale for the Monetary Policy Committee’s decision to maintain the repo rate at 6.5 percent once more. The Reserve Bank supports delaying interest rate reductions for longer. The August MPC meeting of the RBI convened on August 6 and concluded today. After that, the RBI Governor informed about the decisions taken in the meeting. He said that 4 out of 6 members of the MPC favored keeping the repo rate stable. The next meeting of the MPC will be held in the month of October.
18 months have passed since the last alteration.
Those who have been waiting a long time for loans to become more affordable and for the burden of EMIs to lessen will be disappointed by this decision made by the RBI. The Reserve Bank’s Monetary Policy Committee last adjusted the repo rate in February of last year. In other words, the policy interest rate has not changed in the past 1.5 years. The RBI raised the repo rate to 6.5 percent during the February 2023 MPC meeting.
The first meeting following the whole budget presentation
Following the full budget for the fiscal year 2024–25 being presented, the Reserve Bank held its first meeting. On July 23 of last year, Finance Minister Nirmala Sitharaman delivered the complete budget. This was the third meeting of the powerful Monetary Policy Committee of the Reserve Bank in the current financial year. The 6-member Monetary Policy Committee decides on the policy interest rate i.e. repo rate. This was the 9th consecutive meeting of the MPC, in which it was decided to keep the repo rate stable.
This is how the repo rate and your EMI are connected.
The interest rate that banks receive funding from the RBI is known as the repo rate. This indicates a direct relationship between the repo rate and banks’ cost of funding. Bank costs are down when the repo rate is low and up when it rises because of the increased cost of financing. The repo rate is used to determine the interest rates on loans that banks provide to the general public, including personal, house, and auto loans. All of these loans become more affordable as a result of the repo rate lowering. Because house loan interest rates are floating, the impact of a repo rate cut is also felt on the old loan, and the burden of EMI is reduced. However, now people will have to wait more for that.
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