Home, auto loans may be costlier as RBI raises repo rate
Inflation is expected to climb over 9% once hike in petroleum prices gets reflected in the official wholesale price index. Tips to beat inflation I What experts say
By PTI |
MUMBAI: Consumer, home, auto and other loans could become costlier with the Reserve Bank on Wednesday hiking its short-term lending rate to banks by 0.25 per cent to 8 per cent in the face of surging inflation.
Announcing the increase from 7.75 per cent, the central bank said the decision was taken with a view to contain inflationary expectations as the rate of rise in prices touched a 45-month high of 8.24 per cent.
The inflation, analysts said, is expected to climb over nine per cent once hike in petroleum prices gets reflected in the official wholesale price index.
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The move to increase repo rate, at which the central bank gives short term money to banks in exchange of government securities, has been taken for first time this fiscal.
It had earlier been trying to contain inflation by raising cash reserve ratio-- the mandatory deposits that banks keep with RBI.
Commenting on RBI decision Punjab National Bank Chairman K C Chakrabarty said, "All interest rates would be affected. We will take a decison very soon."
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