With no change in repo and reverse repo rates, borrowers will continue to repay loans with low interest rates. Inflation worries seem to continue among consumers, but it might have a positive impact on the economy in long term.
Repo and reverse repo rates play a role in determining the retail loan rates and in controlling inflation. In recent RBI Monetary Policy, both repo rate and reverse repo rate have remain unchanged.
While high rates may reduce inflation, they will affect borrowers who are already suffering from pay cuts and job losses. There is a growing concern among people on how the new rates will affect their lives.
The RBI Governor-headed Monetary Policy Committee is scheduled to meet during December 6-8, 2021. The decision of the rate-setting panel would be announced on Wednesday.
Experts say interest rates seem to have bottomed out so if buying assets such as a home or car is on your cards, borrowers should go ahead.
This is the fifth time in a row the central bank has maintained a status quo on policy rate.
The reverse repo rate will also continue to earn 3.35 per cent for banks for their deposits kept with RBI.
The RBI governor announced that the decision was taken unanimously and added that the reserve repo rate too was kept unchanged at 3.35 per cent.
Three new external members in the panel voted in today's decision.
The reverse repo rate will also continue to earn 3.35 per cent for banks for their parked deposits kept with the RBI.
CRR for all banks was cut by 100 basis points to release Rs 1.37 lakh crore across banking system
The RBI retained GDP growth at 5 per cent for 2019-20 and pegged it at 6 per cent for the next fiscal.
After opening in the green and staying there till the time the RBI policy announcement -- cutting the repo rate by expected 25 basis points -- came, the stocks then started declining.
While SBI was to first one to link its loans and deposits to the repo rate from May and home loans from July, six other peer banks like announced the same last week in which the asset side pricing has moved down fast.
RBI governor Shaktikanta Das said Wednesday that the central bank has lowered the GDP growth forecast for 2019-20 from 7 per cent to 6.9 per cent owing to demand and investment slowdown, which is causing dampening effect on the growth
This is the fourth consecutive time that the RBI has reduced repo rate. In the earlier three policies, it reduced repo rate by 25 basis points each.
The central bank, however, kept monetary policy stance at 'neutral'.
The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das will announce the resolution in noon today.
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