Reserve Bank again increased repo rate by 0.50 percent, loan became expensive – your EMI will increase
RBI MPC June 2022: Due to inflation reaching a high level of several years, the Reserve Bank (RBI) on Wednesday once again announced to increase the repo rate. Now the repo rate has increased by 0.50 percent to 4.90 percent. This is the second consecutive hike in the repo rate in a span of about a month.
Inflation did not leave the option with the Reserve Bank
Reserve Bank Governor Shaktikanta Das informed about the increase in the repo rate today after the June meeting of the Monetary Policy Committee. This three-day meeting of the Monetary Policy Committee of the Reserve Bank was going on since Monday and concluded today. This was the third meeting of RBI MPC in this financial year. In the meeting, the five members of the committee discussed the architectural situation of inflation and economic growth under the leadership of Governor Das. In view of the uncontrollable inflation, the members of the committee agreed that at present there is no other option but to increase the repo rate.
Had to call an emergency meeting last month
Earlier, the Reserve Bank (RBI) had announced a sudden increase in the repo rate last month after a long gap. Governor Das had told in a press conference after the sudden emergency meeting that it has been decided to increase the repo rate by 0.40 percent. He had said that the Monetary Policy Committee of the Central Bank held an emergency meeting to discuss the state of the economy. In that meeting also, the members of the MPC unanimously decided to increase the repo rate by 0.40 percent. Apart from this, in May, along with the repo rate, the Reserve Bank had decided to increase the cash reserve ratio (CRR) by 0.50 percent. However, the MPC retained the Accomodative Monetary Policy Stance.
Such is the situation of inflation in the country
According to government data, the rate of retail inflation in April 2022 was 7.8 percent, which is the highest since May 2014. Similarly, in April 2022, the rate of wholesale inflation had increased to 15.08 percent, which is the highest since December 1998. Food and fuel inflation was responsible for record inflation in the month of April.
Talking about food inflation, it jumped to 8.38 percent in April from 7.68 percent in March. Inflation figures for the month of May have not been released yet. However, the way the prices of tomatoes have increased in the past, the rate of inflation is expected to remain high. On the other hand, the government has taken measures like reducing the tax on petrol and diesel, removing import duty on crude soybean and sunflower oil and bringing down the price of aviation fuel (ATF). These efforts can bring down inflation a bit.
