RBI forced to face rising inflation, your EMI will not be expensive!

A meeting of the Monetary Policy Committee (RBI MPC Meet) of the Reserve Bank of India is to be held in the beginning of October. The situation of inflation in the country is such that this time too there are no chances of any change in the repo rate. This means that your Home Loan EMI is neither going to be expensive nor cheap. Know what experts say...

The level of retail inflation in the country is still very high. Its impact can be seen on the decision of the Monetary Policy Committee (MPC) of RBI to be held early next month. The MPC meeting, which is held every two months, is to be held this time from 4 to 6 October. In this, the Reserve Bank of India (RBI) takes the decision to increase or decrease the repo rate, which directly affects the EMIs of people ranging from home loan to personal loan.

Repo rate is the interest rate at which the Reserve Bank of India lends capital to the commercial banks of the country. This affects the capital cost of banks, which they compensate from the interest charged on loans. Therefore, when the repo rate increases, the loan EMI of the people increases and when it decreases, it comes down. The Reserve Bank of India last changed the repo rate in February 2023 and since then it has remained stable at 6.50 percent.

Impact of inflation and dollar impact

To bring down retail inflation, RBI had continuously increased the repo rate last year by a total of 2.50 percent. But the level of inflation in the country is still quite high. On top of this, the policy of the Federal Reserve, the central bank of America, is also affecting the economies around the world.

The Federal Reserve has increased interest rates to bring down inflation in America. It has also been decided to continue the tough stance going forward also. This will affect the flow of capital across the world and India is not untouched by this.

What is the opinion of experts?

According to PTI news, Bank of Baroda Chief Economist Madan Sabnavis says that this time also RBI is not expected to make any change in the interest rate. Inflation still remains high, while it is also a very difficult period at the cash flow level. If RBI's estimates regarding inflation are considered correct, then it is likely to be more than 5% in the October-December quarter also. Therefore, there will probably be no change in the repo rate even in the January-March quarter.

Madan Sabnavis has also cited seasonal conditions. He said that there is uncertainty regarding the yield and price of Kharif crops and especially pulses. This will also affect inflation. If we look at the recent figures of retail inflation, it was at 6.83 percent in August. Whereas in July it was at 7.44 percent. In both cases, it remained above the maximum rate of 6 percent of RBI.

Chief Economist of ICRA Limited, Aditi Nair, says that due to fall in tomato prices, inflation rate is likely to come down to 5.3 to 5.5 percent in September. Still, there will be no change in the repo rate in the monetary policy of October. The Reserve Bank has estimated the retail inflation rate to be 5.4 percent in 2023-24.