The Reserve Bank of India has decided to increase the policy repo rate by 0.40%, in order to make home loans costlier. It has also announced a change in the key lending rates in its trials to regulate inflation. On the other hand, the Apex bank announced a hike by 40 basis points in the leading rate on Wednesday.
Later, a rise in the number of deposits that banks are needed to maintain a cash reserve by 50 basis points to 4.5% has been announced by the RBI. The Governor, Shaktikanta Das said that MPC judged that the inflation outlook permits an absolute and timely response through resolute and calibrated measures to ensure that second-round effects of supply-side shocks on the economy are contained and long-term inflation expectations are kept firmly anchored.
The director of AMs Project Consultants Pvt Ltd, Vinit Dungarwal said, “Everyone has shell shocked to witness the mid-cycle rate hike by RBI. This move was necessitated by the growing inflation rates and the current geopolitical environment. This move will deduct the current demand momentum from a real estate aspect and add to the woes of developers. Already, the developers are grappling with the growing prices of raw materials and this move will make home loans expensive.”
The CEO and director of Axis Ecorp said, “RBI had been maintaining an obvious stance till now but it has increased the policy rate by 40 bps to 4.40%. Due to this, the SDF rate was hiked to 4.15% and MSF rate to 4.65%.”