Mumbai:The RBI on Wednesday hiked repo rate (the rate at which it lends money to banks) by 25 basis points to 6.25 per cent, the first increase since 2014.
With this hike, the interest rates on loans will become dearer as it will make borrowing for banks expensive and they may charge higher from customers.
A few days ahead of RBI’s monetary policy review, SBI, PNB and ICICI Bank had last week increased benchmark lending rates or MCLR (Marginal Cost of funds based Lending rate) by up to 0.1 per cent, making loans costlier for consumers.
Most home and auto loans are linked to MCLR which means that higher lending rates indicate that the equated monthly installments (EMIs) on loans will go up.
However, the central bank retained the Gross Domestic Product (GDP) growth for the financial year 2018-19 at 7.4 per cent. The RBI projected the country’s GDP growth at 7.5-7.6 per cent in the first half and 7.3-7.4 per cent in the second half.
“GDP growth for 2017-18 has been revised and estimated at 6.7 per cent backed by an all-time high production of food grains and horticulture, strengthening of industrial growth and resilient services sector activity,” RBI Governor Urjit Patel told the press.
