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Repo Rate: The Reserve Bank of India has decided to reduce the repo rate by 0.25%. This decision by RBI was taken on Wednesday morning after MPC’s meeting lasted from April 7 to 9. After this, there will be a decrease in people’s home and car loan EMI. This is the second consecutive time RBI has decided to cut the repo rate. However, experts were already guessing the RBI’s move.
In February last, the repo rate of 0.25 percent was announced by the RBI, after which the repo rate was reduced from 6.50% to 6.25%. The repo rate was increased to 6.50% in June 2023 by RBI. That is, this change was made in 5 years.
However, the hope of any change in the rate of deposits in the bank is very low. That is, the benefits can be given to those taking home loans from the bank, but the depositors are not going to benefit from it.
According to the TOE, about this, ICRs’ Senior Vice President Anil Gupta says, there is a stir in the market at this time, in such a situation, what kind of practical change is coming in the retail investor, it will be known in a long time, not immediately. But at this time there is a lot of difference between fixed deposit rate and deposit of savings account.
RBI’s inflation control target is between 2% to 6% and currently India remains in this band. This means that now the focus of the ABI will be on boosting the growth. This will be the news of small business, startups and the general public.
He said, we are not immediately expecting the deduction in fixed deposits due to the pressure of liquidity coverage ratio on the bank. Actually, the interest rate at which RBI gives money to other banks is called repo rate. In such a situation, when the interest rate from the RBI is cheaper, then the banks also give the benefit to many customers by reducing the loan interest rate.
In view of the market situation, decisions have been taken by RBI from time to time. That is, inflation depends on the flow of liquidity in more or more markets. In such a situation, steps are taken by the RBI to reduce inflation, but when things are normal in the market or are running at a slow pace, then it is announced to reduce the repo rate to increase liquidity.
In February last, the repo rate of 0.25 percent was announced by the RBI, after which the repo rate was reduced from 6.50% to 6.25%. The repo rate was increased to 6.50% in June 2023 by RBI. That is, this change was made in 5 years.
