The Reserve Bank of India (RBI), chaired by Governor Shaktikanta Das, has announced its decision regarding the repo rate. Despite expectations for a change, Governor Das confirmed that the repo rate will remain unchanged at 6.50 percent. This marks the sixth consecutive time that the rate has remained stable.
The last adjustment to the repo rate was made in February 2023, when it was increased from 6.25 percent to 6.50 percent. This means that interest rates have remained constant for over a year. Governor Das also highlighted that retail inflation is forecasted to be at 4.5 percent in the upcoming fiscal year.
In his statement, Governor Das emphasized the RBI's focus on reducing inflation over the past two years. He mentioned that the repo rate was raised by 2.5 percent to address inflation concerns. Additionally, he expressed optimism about the global economic outlook for 2024, despite uncertainties stemming from conflicts in the Red Sea region.
Following the RBI's announcement, the stock market experienced a notable decline, with the Sensex dropping by over 600 points and the Nifty down by nearly 200 points. Banknifty also saw a significant decrease, falling by more than 500 points.
This decision by the RBI regarding the repo rate will have implications for various sectors, including home loans, auto loans, and personal loans. If the repo rate is adjusted downwards in the future, borrowers can anticipate a reduction in interest rates and EMIs for these loans.