New Delhi, PTI/Business Desk. Rating agency CRISIL said that after the inflation rate reached an eight-year high of 7.79 percent in April, now the Reserve Bank of India can increase the repo rate by one percent for the current financial year. CRISIL’s research unit has said that the average consumer price index (CPI) based inflation in the current financial year is likely to reach 6.3 per cent, which is higher than the Reserve Bank’s satisfactory level of 6 per cent. Let us inform that at the beginning of this month (April), the Reserve Bank had increased the repo rate by 0.4 percent to 4.40 percent. This step was taken by the central bank to control rising inflation. Earlier, the Reserve Bank had not increased the repo rate since August 2018.
Crisil said, “Inflation in this financial year is set to widen. Inflation in food, fuel and core sectors is on the rise. We expect RBI to reduce the repo rate for this financial year from 0.75 per cent to 1 per cent.” will increase.” If this happens, then people’s loan EMIs are likely to increase because after the central bank increases the repo rate, banks also usually increase the loan rates, which makes the loan costlier and the EMI also increases.
The agency expects inflation to reach a high of 7 per cent in FY2023, but despite this, the rate of hike in the repo rate will remain low. The agency said inflation would be at its highest level in September 2022. Upasana Bhardwaj, senior economist at Kotak Mahindra Bank, said going forward there will “increased pressure” on the MPC (Monetary Policy Committee) to aggressively hike policy rates, especially with no near-term outlook on the supply side amid geopolitical tensions. Relief will not be seen. “We expect the repo rate to increase by 0.90-1.10 per cent in 2022, with a growth of 0.35-0.40 per cent in June,” he said.
Credit: www.jagran.com /