RBI hikes repo rate by 50 basis points, bank lending rates to go up

Mumbai: The lending rates of banks would go up as the Reserve Bank of India (RBI) raised its key interest rate by 50 basis points on Wednesday, taking the repo rate to 4.9 per cent.

The Monetary Policy Committee (MPC) of RBI on Wednesday raised the repo rate by 50 basis points.

The RBI also raised its inflation projection for the current fiscal to 6.7 per cent, well above the upper-end of its target range of 2-6 per cent.

The immediate impact of the RBI repo rate hike is on the retail loans such as home loans which are linked to the bank’s external benchmark.

Notably, most banks have linked their lending rates to the RBI repo rate. With the hike in interest rate, the impact is immediate for the borrowers.

RBI in its statement said that the recovery in domestic economic activity is gathering strength.

Rural consumption should benefit from the likely normal south-west monsoon and the expected improvement in agricultural prospects.