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The 25 basis points hike in key policy rate by <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> is in line with expectations, and hopefully is the last in the current cycle of rate increase which started in May 2022 in view of rising inflation, opined industry bodies and experts. It was the sixth hike in a row, though the quantum was low. The central bank has cumulatively hiked repo rate by 250 basis points since May last year in a bid to contain rising inflation in the wake of global geopolitical tensions. "There is no doubt that moderating inflation in today's challenging global environment should be a priority for the RBI-Monetary Policy Committee and the RBI has done a commendable job with the result that the pace of price rise has reversed. "In line with the other broad objective of sustainable growth, we want to believe this is the last rate hike by the RBI," said Assocham Secretary General Deepak Sood. The RBI raised interest rate by 35 basis points in December 2022. It was hiked by 40 basis points in May and by 50 basis points each in June, August and September. Commenting on the RBI policy, Madan Sabnavis, Chief Economist, Bank of Baroda said the major takeaway is that there will be a prolonged pause for sure before any further action is taken by the RBI and will be data-driven. "Presently it looks like that there is an upside risk to the inflation number and hence a rate hike could be thought of later. A rate cut during the year looks more unlikely and can be on the cards only when there is a change in stance first," he added. <keyword id="15466055" type="General" weightage="50" keywordseo="saket-dalmia" source="Orion">Saket Dalmia</keyword>, President, PHDCCI opined that the continuous increase in repo rate will have impact on consumption demand and production possibilities in factories. "As inflation has been in a significant deceleration since the last many months, we look forward a pause in the policy rates," he added. The Reserve Bank has projected retail inflation to ease to 5.3 per cent in next fiscal from 6.5 per cent this year on assumptions of lower imported inflation, even though core inflation remains sticky. Experts also said repo rate is directly linked to loan rates offered by lenders so an increase in repo will increase the borrowing cost and vice-versa. "The rate hike of 25 bps today will make EMIs expensive by approximately 2-4 per cent. Borrowers will either have to shell out extra money to repay their loans or will have to extend the loan tenure," said <keyword id="2951021" type="General" weightage="50" keywordseo="v-swaminathan" source="Orion">V Swaminathan</keyword>, Executive Chairman, Andromeda Sales and Apnapaisa.com. Since May 2022, the repo rate has been increased by 250 basis points. So, the EMI for a 20-year home loan taken in May 2022 of Rs 70 lakh at 7 per cent was Rs 54,271, he explained. "But when we factor in the 250-bps hike since May, the interest rate becomes 9.50 per cent, increasing the EMI to Rs 65,249." <keyword id="11357847" type="General" weightage="50" keywordseo="radhavi-deshpande" source="Orion">Radhavi Deshpande</keyword>, President and Chief Investment Officer, Kotak Mahindra Life Insurance Company said having front loaded most of the rate hikes, incremental policy rate decisions will largely be data and global central bank stance related. Markets would settle for a longish pause here on than expect additional tightening and reversals in short period. "We expect 10 year G-Sec to hover around 7.25-4 per cent in the short term," Deshpande said. Bhavik <keyword id="1346781" type="General" weightage="50" keywordseo="thakkar" source="Orion">Thakkar</keyword>, CEO of Abans Investment Managers too said while this will increase cost of borrowing for all types of loan, the impact on home loan borrower this time could not just be extension of home loan tenor but higher EMIs also. One of the things home loan borrowers should do is ask their lender to increase spread (difference between MCLR/RPLR for home loan companies and home loan rates offered to borrower), Thakkar said. Sumita Pillai, Chief Executive Officer of Torus Private Wealth too said the RBI move was in line with expectation. "We expect the rate hike cycle to conclude as inflation has started showing signs of moderation and RBI has a clear focus on growth going forward," Pillai said. Meanwhile, Sandeep Bagla CEO, TRUST Mutual Fund said the market is a tad disappointed as there was no change in stance from "withdrawal of accommodation" to neutral. He further said market forecasters are expecting inflation to trend lower from RBI projections. The RBI will release the minutes of the six-member Monetary Policy Committee meeting on February 22, 2023. The next meeting of the MPC is scheduled for April 3-6, 2023. SEE ALSO: <a href="https://www.businessinsider.in/finance/news/rbi-hikes-interest-rates-by-25-basis-points-to-6-5-says-core-inflation-remains-sticky/articleshow/97716217.cms">RBI hikes interest rate by 25 bps to 6.5%, says core inflation remains ‘sticky’</a> <a href="https://www.businessinsider.in/business/corporates/news/adani-transmission-reports-78-rise-in-q3-net-profit-to-475-crore-on-one-time-income/articleshow/97650165.cms">Adani Transmission reports 78% rise in Q3 net profit to ₹475 crore on one-time income</a> <a href="https://www.businessinsider.in/business/telecom/news/bharti-airtel-q3-net-profit-jumps-91-to-1588-crore-misses-estimates/articleshow/97698481.cms">Bharti Airtel Q3 net profit jumps 91% to ₹1,588 crore, misses estimates</a>

Hopefully, this is last rate hike by RBI in current cycle: Industry, experts

Realtors' apex body <keyword id="6393312" type="General" weightage="80" keywordseo="credai" source="Orion">Credai</keyword> on Thursday requested the <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> not to increase the repo rate in the upcoming monetary policy as this would raise the borrowing cost of builders and customers, impacting housing sales. With retail inflation remaining above the comfort level of 6 per cent and most global peers, including the <keyword id="117388" type="General" weightage="50" keywordseo="us-fed" source="Orion">US Fed</keyword>, continuing their hawkish stance, industry experts feel the Reserve Bank of India may go in for a 25 basis points hike in the bi-monthly monetary policy to be announced on April 6. Confederation of Real Estate Developers' Association of India (Credai), having more than 13,000 developers as members, has "urged the RBI to not to increase the repo rate any further, citing the financial challenges faced by developers and the potential impact on housing sales due to the consequential rise in prices and home loan rates". In the last one year, the body said, the repo rate has increased from 4 to 6.5 per cent and another hike would lead to even higher borrowing costs for developers. Credai National President Harsh Vardhan Patodia said, "In the last 1 year, the cost of construction has risen rapidly due to the gradual increase in repo rates by the RBI, which has adversely impacted many developers as they struggle to cope financially. Another repo rate hike would not only make certain projects financially unfeasible, but it would also deter homebuyers as home loan rates will be at an all-time high". The association said housing prices rose by 5-6 per cent in the last one year and any hike in the repo rate would lead to even higher project costs and housing prices. It argued that the profit margins of builders would reduce. Interest rates on home loans would touch almost double-digit home loan rates, deterring customers from purchasing properties, especially in tier 1 cities, Credai said. "This could lead to a slowdown in the real estate market and result in homebuyers postponing their purchase plans, reversing a trend in the post-CODVID era wherein homebuying was on the rise," it cautioned. Property consultants and developers also feel that sales could be hit in case of a further rise in mortgage rates. Housing.com CEO Dhruv <keyword id="274894" type="General" weightage="80" keywordseo="agarwala" source="Orion">Agarwala</keyword> said the RBI would probably stick to a moderate increase in its benchmark lending rate in the upcoming policy announcement, before hitting a pause button on hikes later in 2023. "The move is likely to have limited impact on real estate demand as home purchase decisions are driven and determined by several factors other than just home loan rates. That said, borrowers would feel the pinch of this increase in rates as home loan EMIs for existing and new loans would go up," Agarwala added. Realty firm Signature Global Chairman Pradeep Aggarwal said any further increase in policy rates could push the home loan interest rate beyond the psychological barrier of 10 per cent, "which could have a substantial impact on buyer sentiments and affordability". <keyword id="12503468" type="General" weightage="50" keywordseo="vimal-nadar" source="Orion">Vimal Nadar</keyword>, Head of Research at Colliers India, said home loan interest rates are already at an alarmingly higher level of 9.5 per cent and above. "With homebuyers already stretched on EMIs and loan tenures, a further hike in interest rate will hit them hard. The impact will be compounded in the current environment where the industry expects a lesser increase in income levels with housing prices remaining firm," Nadar said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/small-stocks-lag-behind-in-fy23-take-bigger-hit-than-bluechip-firms/articleshow/99117250.cms">Small stocks lag behind in FY23; take bigger hit than bluechip firms</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/tamil-nadu-says-nahi-to-dahi-over-hindi-name-on-curd-packets/articleshow/99116854.cms">Tamil Nadu says 'nahi to dahi' over Hindi name on curd packets</a>

Repo rate hike will slow down real estate, reverse post-Covid trends, says industry body to RBI

The surprise move to hold repo rate should not be seen as an indicator of carrying out similar moves in the future, and <keyword id="30067" type="General" weightage="100" keywordseo="rbi" source="Orion">RBI</keyword> will "not hesitate" in taking further action on rates if needed, Governor <keyword id="6359111" type="General" weightage="80" keywordseo="shaktikanta-das" source="Orion">Shaktikanta Das</keyword> said on Thursday. "If I have to characterise today's monetary policy in just one line...it's a pause, not a pivot," Das told reporters in the customary interaction with reporters after the announcement of the policy review. Earlier in the day, the six-member MPC unanimously decided to pause after repeated hikes in rate over the last 11 months, surprising analysts who were expecting the central bank to make a final 25 basis points hike before opting to pause. The benchmark policy rate (repo rate) is 6.5 per cent. Das said the job to decisively bring down inflation is "not yet finished", and RBI's policy priority continues to be price stability. RBI is keen to assess the cumulative impact of the rate actions done till now, he said. There has been a cumulative hike of 250 basis points since May 2022. In his statement while announcing the policy review, Das pledged to hike interest rate again if needed, saying the decision to pause was "for this meeting only". Speaking to reporters, Das reminded that RBI's target is to get headline inflation to 4 per cent from the 6 per cent levels at present, and the monetary policy will be working towards progressively aligning with the target. Deputy Governor Michael Patra said RBI has marginally upped its FY24 growth estimate to 6.5 per cent primarily on assumption of a decline in the average oil price to USD 85 per barrel from USD 90 per barrel earlier.

It's just a pause not a pivot, says Shaktikanta Das on RBI's status quo

The <keyword id="6354335" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="Orion">Reserve Bank of India</keyword> (RBI) may take cues from its global counterparts, including the US Federal Reserve, to raise interest rate for the fourth time in a row on Friday to tame stubborn inflation. The RBI, which has since May raised the short-term lending rate (repo) by 140 basis points (bps), may again go for a 50-bps increase to take it to a three-year high of 5.9 per cent, say experts. The central bank had raised the repo rate by 40 bps in May and 50 bps each in June and August. The present rate is 5.4 per cent. The consumer price index (CPI) based retail inflation, which had started showing signs of moderation since May, has again firmed up to 7 per cent in August. The RBI takes into account retail inflation while framing its bi-monthly monetary policy. The RBI Governor-headed Monetary Policy Committee (MPC) is scheduled to start its three-day deliberations on Wednesday. The decision of the rate-setting panel would be announced on Friday (September 30). The US Fed delivered third consecutive rate hike after it raised the rates by 75 bps to take the target range to 3 - 3.25 per cent. The central banks of the UK and the EU have also gone for rate hikes to tame inflation. Madan Sabnavis, Chief Economist at Bank of Baroda, said inflation in India remains high at around 7 per cent and is unlikely to come down any time soon. "This means that a rate hike is given. The quantum is what the market would be interested in. While a hike of 25-35 bps would have signaled that the RBI is confident that the worst of inflation is over, the recent developments in the forex market could prompt a higher quantum of 50 bps to stay on track with other markets so as to retain investor interest," he said. The government has tasked the RBI to ensure the retail inflation remains at 4 per cent, with a margin of 2 per cent on either side. Dhruv Agarwala, Group CEO, Housing.com, said reining in inflation will remain the RBI's top concern amid resilient economic expansion and robust credit growth. "Any hike in rates would result in banks increasing home loan interest rates, too. But, we are of the opinion that its impact would not be significant as demand for property remains robust. Demand is only going to accelerate further during this festive season," he said. Global commodity prices have remained volatile after their fall from historical highs in June. SBI in a special report said a 50 basis points hike in repo rate "looks imminent". "We expect the peak repo rate in the cycle at 6.25 per cent. A final rate hike of 35 bps is expected in December policy," it said. Aditi Nayar, Chief Economist, ICRA, too expects another 'new normal' 50 bps rate hike from the MPC in September 2022. With inflation expected to soften in October 2022, the December policy decision is likely to be highly data dependent, she added SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/rupee-likely-to-touch-82-against-the-greenback/articleshow/94399853.cms">Rupee likely to touch 82 against the greenback</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/lower-output-of-rice-pulses-to-put-pressure-on-foodgrain-prices-in-india/articleshow/94395983.cms">Lower output of rice, pulses to put pressure on foodgrain prices in India</a>

You Searched For "RBI rate hike impact" and got 4 results

Hopefully, this is last rate hike by RBI in current cycle: Industry, experts

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Repo rate hike will slow down real estate, reverse post-Covid trends, says industry body to RBI

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It's just a pause not a pivot, says Shaktikanta Das on RBI's status quo

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RBI set for fourth straight rate hike to quell inflation, say experts

PTI

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