The Monetary Policy Committee of the Reserve Bank of India (RBI) can reduce the pace of increase in the policy rate. This opinion was expressed on behalf of Deutsche Bank. Deutsche Bank estimates that the Reserve Bank may increase the repo rate by a quarter per cent in the September monetary review. The central bank has increased the repo rate by 1.40 per cent from May to August this year.
The Bank of Germany said in a report that from here the Reserve Bank will reduce the pace of increase in interest rates. Earlier in the first week of August, RBI had announced a 50 basis point increase in the repo rate. With this increase, the central bank has reduced the repo rate to 5.40 per cent from the earlier repo rate i.e. 5.5 per cent before the covid epidemic.
Announcing the hike in the repo rate, RBI Governor Shaktikanta Das had said that the Indian economy is battling high inflation and it is necessary to bring it under control. "The Monetary Policy Committee has also decided to focus on withdrawing the soft policy stance to contain inflation," Das said. Shaktikanta Das said that many institutions from IMF to IMF have predicted the rapid growth of our economy and it will grow the fastest.
Significantly, repo rate is the rate at which the bank is given loan by RBI and on the basis of this, banks give loan to customers, whereas reverse repo rate is the rate at which RBI gives them loan on deposits from banks. pays interest. In such a situation, when the RBI increases the repo rate, the burden on the banks increases and on behalf of the bank then the loan is expensive in the bank rate.
