RBI MPC Meeting: The Reserve Bank of India (RBI) has increased the policy repo rate by 25 basis points (0.25%) from 5.25% to 5.50% as per the decision of the Monetary Policy Committee (MPC) headed by Governor Sanjay Malhotra. After this decision of the Central Bank, the monthly installments (EMI) of home loan and car loan will become expensive. Whereas the interest rates offered by banks on fixed deposits (FD) will increase.
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Issuing the monetary policy statement, RBI Governor Sanjay Malhotra said that the Monetary Policy Committee (MPC) has increased the repo rate by 25 basis points to 5.5%. According to the RBI Governor, the Monetary Policy Committee unanimously decided to increase the policy interest rate. The economy has remained strong and the pace of economic activity remains broad-based. RBI Governor says that weak monsoon and strong El Nino may impact the coming Rabi season. RBI has increased the GDP growth estimate for FY 2027 by 40 basis points to 7.1%. Price pressure is seen increasing in many types of commodities. RBI has marginally raised its inflation forecast for FY2027 to 5.1% from 5%.
Governor Sanjay Malhotra said, “The sudden re-escalation of conflict in West Asia in September and the resulting volatility and tightening of global crude oil prices worsened the global economic environment and increased financial market volatility. Although global growth remains strong, it is projected to slow this year compared to last year.”
He said, “Global inflation is expected to increase rapidly due to rising energy costs and rising food prices, which is forcing major central banks around the world to tighten monetary policies. Trade uncertainty, rising bond yields in advanced economies and the strength of the dollar are keeping the global financial market environment in a state of nervousness and weakness. Further tightening of global financial conditions, AI stocks are right.” “Uncertainty over valuations and lack of resolution to the West Asia conflict pose significant risks.”
The RBI Governor said, “The MPC recognizes that the global situation remains challenging due to geopolitical developments. Despite this, the Indian economy remains strong and the scope of economic growth remains broad. At the same time, the economy is expected to remain strong. Looking at the available data, it is also clear that inflation and its future prospects are not as normal as last year. Headline CPI inflation in the next three quarters, including this quarter. The average inflation is expected to be around 5.8 percent and core inflation is expected to be 4.4 percent in this financial year.