RBI’s Policy On Expected Lines, Indicates Softening Of Rate Hike Intensity: Experts

RBI policy on projected lines, shows a slight decrease in intensity of rate hikes: Experts

The RBI also lowered its GDP growth forecast for the country to 6.8% for the current fiscal. (File)


The Reserve Bank’s decision to raise its benchmark lending rate by 35 basis points is based on expected levels and suggests the magnitude of rate hikes will soften in the future, industry authorities and experts said. said on Wednesday.

After making three consecutive repo rate hikes to 50 basis points (bps) each and above 40 basis points in May, the RBI on Wednesday slowed borrowing costs growth in signs suggests interest rates may be nearing a peak, even as it reiterates its resolve to fight inflation that has stayed above safe levels for 10 straight months.

FICCI President Sanjiv Mehta said the RBI’s policy action to raise the repo rate to 35 bps was widely anticipated as the fight against inflation was still far from over.

“While the CPI inflation forecast has been maintained at 6.7% for 2022-23 and some early signs of inflation cooling on a sequential basis are imminent, we need to see this trend emerges on a long-term basis for the RBI to indicate a change of stance,” he said.

Industry group Assocham also said the RBI’s 35 basis point hike in its policy rate was as expected, despite signals that the intensity of rate hikes “is softening”.

“Despite challenges in the global economy and uncertainties related to energy prices, supply chains and geopolitical situation, India remains among the fastest growing economies in the world, as stated by RBI Governor Shaktikanta Das,” said Secretary General Deepak Sood.

The Reserve Bank on Wednesday also lowered its GDP growth forecast for the country to 6.8% for the current fiscal from 7% previously, as geopolitical tensions continue and tightening financial conditions. global mainstream.

However, India remains a bright spot in a bleak world and will be one of the fastest growing major economies, said RBI Governor Das.

Another industry body, the PHD Chamber, said that as inflation is cooling, a calibrated approach to sustaining economic growth will be crucial to attracting investment.

“Efforts to restore demand and manufacturers’ sentiment towards increased production will be critical at this time,” said Saket Dalmia, President of the PHD Division.

The latest repo rate hike will continue to hit consumers as loans become more expensive.

“Let’s see how this will impact a borrower who has borrowed Rs 30,000 for a term of 20 years at 8.50%. Currently, they will pay Rs 26,035 as EMI. But if we calculate 0 .35 per V Swaminathan, said executive chairman of Andromeda Loans.

This means that the borrower has to pay an additional Rs 668 monthly for the same home loan payment and they will have to pay Rs 1.60 lakh for the entire term of the loan, he added.

Prashant Utreja, CEO of Reliance Home Finance, said the repo rate hike is likely to result in a slight increase in lending rates, which may not prove to be a deterrent for the real estate industry in Short-term.

“For now, sentiment around the real estate sector is positive, supported by strong demand amid expectations of price increases in the coming days. Given the moderated pace of repo rate hikes, Lenders will assess market sentiment before making a decision to raise interest rates for consumers,” Utreja said.

Anand B, Assistant Professor, Narsee Monjee Institute for Management Studies (NMIMS), said that although the growth rate forecast for 2022-2023 has been revised at 6.8% (despite a range of constraints). rate hikes), but it does provide enough space for the central bank to continue its efforts to anchor inflation and inflation expectations.

Sandeep Bagla, CEO of Trust Mutual Fund, said the RBI’s focus on controlling inflation will eventually calm the bond market as lower inflation in the medium term is good for bond holders. . In addition, the market should also get relief from falling crude oil prices in the international market.

RBI also announced that an additional feature will be added to the popular UPI platform to support payments when the delivery of goods and services takes place later, such as e-commerce purchases, bookings, etc. hotel rooms or invest in stocks.

Commenting on the new feature, Jasmin B Gupta, Co-Founder and CEO of LXME, said that customers will be able to lock funds in their bank accounts for specific purposes such as hotel reservations, buy securities, will be debited later. provide services/products.

The value-added feature will enable trust-building in person-to-seller and seller-to-seller transactions, Gupta adds.

Regarding RBI’s decision to expand the scope of Bharat Bill Payment System to include all payments and debt collection, Manan Dixit, founder of FidyPay, said BBPS will become a one-step solution. for utility bills or any monthly payments that consumers make on a regular basis.

(Except for the title, this story has not been edited by NDTV staff and is published from an aggregated feed.)

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