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RBI could increase the repo rate up to 50 bps: BT Poll

RBI could increase the repo rate up to 50 bps: BT Poll

The next meeting of the Monetary Policy Committee (MPC) is scheduled to start tomorrow with the policy announcement to be made on Friday, September 30, 2022.

RBI has already increased the repo rate three times since May. During this period the key policy rate has risen from 4 per cent to 5.40 per cent.  (Photo: Reuters) RBI has already increased the repo rate three times since May. During this period the key policy rate has risen from 4 per cent to 5.40 per cent. (Photo: Reuters)

The Reserve Bank of India (RBI) may increase the repo rate upto 50 basis points in its policy statement on September 30 following a 75-basis points rate hike by the US Federal Reserve earlier this month, according to a majority of respondents in a Business Today poll. The next meeting of the Monetary Policy Committee (MPC) is scheduled to start tomorrow with the policy announcement to be made on Friday, September 30, 2022. 


The majority of participants voted for an increase of 50 bps from the current rate of 5.4 per cent. More than half of the participants who participated in the poll on respective platforms said that RBI can increase the rate by 50 basis points (Twitter: 72.5 per cent, Linkedin: 57 per cent, Youtube: 58 per cent, Instagram: 29 per cent) while the others expect it to increase by 25-35 bps with the small percentage voting for no hike. 


RBI has already increased the repo rate three times since May. During this period the key policy rate has risen from 4 per cent to 5.40 per cent. If RBI increases rates by 50 bps in this monetary policy then the repo rate may reach 5.90 per cent. 


The rate hike may come due to an increase in the US interest rate by 75 bps points due to the unexpectedly high inflation number for August at 8.3 per cent even after the Fed had already hiked interest rates in the previous two meetings, each time by 75 basis points. Closer home also the inflation rate is high, which is at 7 per cent, well above the RBI's upper margin of 6 per cent for the eighth consecutive month. Experts say the strengthening dollar along with geopolitical concerns in Europe will also weigh on the MPC while announcing the decision on Friday. 


Those who have taken out loans at floating interest rates may get impacted by the likely rise in repo rates. Therefore, your car, personal and home loans may become costlier, as when the cost of borrowing increases for banks it automatically leads to a proportionate rise in lending rates by banks. 

Also read: Weekly market wrap: Market watchers, investors set their eyes on RBI interest rate meeting next week

Also read: Home, car and personal loans: Your EMIs are likely to go up after Friday

Published on: Sep 27, 2022, 5:43 PM IST
Posted by: Tarab Zaidi, Sep 27, 2022, 5:39 PM IST
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