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Repo Rate Hit

6/8/2018

For the first time in the Modi Government term at the fag end the Reserve Bank of India for the first time in four and a half year enhanced the Repo Rate by 0.25 per cent to make it 6.25 per cent. Generally there are parting gift but the Modi Government has given parting kick by admitting inflation and price rise in the Nation. The petro-diesel prices and constant rise in the cost of transportation cost has resulted in the grim situation. The RBI has also hinted in the coming time the prices will go up further and in the next revision the Repo rates likely to go further. In last 6 month the price rise has gone up by 4 per cent. The increase in the Repo will affect the growth rate. In the year 2017-18 the growth rate was 6.7 per cent which was lowest in the last four years. The price of petro in one year have gone up by 6.2 per cent. Now on all home, auto and all other bank loans will in cost more. Rise in global crude prices is a risk to consumer inflation. There are many worrying factor beside Repo under the volatile over consumers large scale by foreign investors, falling measures and inflationary expectations. The Reserve Repo Rate has also been raised by 0.25 basic point to 6 per cent. The rates are hiked for the first time after January 2014. For sometime status quo were maintained in the both the Repo rates. The price of petro crude have surged form 66 dollar per barrel to 74 dollar. Above with it an increase of other global commodity prices. The GDP growth for 2018-19 is retained at 7.4 per cent. The revision of housing loan limit for priority sector lending from existing Rs.28 lakh to Rs.55 lakh may lead to reduction on interest rates on home loans in metros. Banks have to lend around 40 per cent of all loans to priority sectors like micro enterprise, borrowers from the weaker section and agriculture sector among others where defaults are very high. The default rate in housing of loans in the range of Rs.10 lakh to Rs.35 lakh are comparatively low. The rates governing the banks mandatory government bound ownership under by quality increase ratio have been eased, which could pressure on interest rates shorter maturity bonds, which low over an unusual spike in the recent month. The RBI concerns are rising global crude price will feed into local inflation. Besides rise in consumption cost, farmer too face rising prices pressure for new makeover. The SLR bonds to be used for liquidity coverage.

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