After 3.5 years, RBI hikes repo rate: How does it impact your EMIs? Explained
The Reserve Bank of India has increased the repo rate by 25 basis points to combat rising inflation caused by global geopolitical tensions. This hike will lead to higher interest rates for borrowers, particularly those with floating-rate loans.
Why it matters
Rising interest rates directly impact the disposable income of households and the overall cost of borrowing in the Indian economy.
The Reserve Bank of India has announced a repo rate hike to keep inflation under check. But already faced with higher costs of daily essentials, Indian households have to now contend with paying higher EMIs for their loans.The US-Iran war has fed into higher costs for daily use items and the impact is visible in retail inflation numbers which are steadily rising. To keep inflation under 6%, RBI-led Monetary Policy Committee has opted for a 25 basis points repo rate hike in its review on Wednesday.But why does a hike in repo rate hit your pocket? Is it better for you to opt for an EMI hike or an extension of your loan tenor? And how does this step from RBI help people looking to invest in fixed deposits?
Also covering this story
4 other newsrooms covered this event. We read each version separately.
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