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RBI Monetary Policy Latest Update: The Reserve Bank of India (RBI) on Thursday kept the interest rate unchanged at 4 per cent and also decided to continue with its accommodative stance in the backdrop of elevated level of inflation. Notably, this is the tenth time in a row that the Monetary Policy Committee (MPC) has maintained the status quo. This is the first MPC meeting after presentation of Budget 2022-23 in Parliament on February 1.
As the RBI kept the status quo on key policy rates, the borrowers will continue to pay low rates on their home, car loans. However, for the bank depositors, there is no immediate respite from one of the lowest interest rates on fixed deposits as their wait has got a little longer. Here’s how the RBI’s status quo will impact the common man.
Home Loan, Car EMI: As the RBI planned to keep repo rate unchanged, the rates on home, and car loans linked to repo-rate are unlikely to increase anytime soon unless the banks decide to increase or decrease its risk premium or margin on the loan. Hence, the loan EMIs of home and car is likely to remain the same.
And people who are planning to take fresh loans, should grab the opportunity soon as many banks are offering discounts on interest rates and processing fee waiver as well.
As per the updates, the home loan interest rates will now start from 6.50 per cent while car loans can be availed starting from 7.20 per cent interest.
Moreover, people who already have home, car loans linked to BPLR, Base Rate, MCLR, are not likely to see any change in their loan EMIs. According to experts, if your loan is more than 5 years old, then it makes sense to switch it to a new lender who provides lower rates compared to the existing lender. In this regard, the RBI had made it mandatory since October 1, 2019, for all floating rate retail loans from banks to be linked to an external benchmark like the repo rate.
Rates on Fixed Deposit in Banks: Since the RBI decided to keep the repo rate unchanged, there may not be further reduction in FD rates across the tenures by any bank. However, some banks may change rates on FDs of specific tenure based on demand and supply. According to experts the FD rates are already at a historical low and there may not be any further reduction in FD rates, given that real rates have become negative amid high inflation.
At this time, if people are planning to book an FD now or are planning to renew the existing FD, then it will be better to go for shorter-term deposit, so that the deposit is not locked at a lower rate for long time.
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