By Accommodation Times Bureau
The RBI has raised a ‘cautionary flag’ on inflation, by raising the repo rate by 25 basis points. This marks the first interest rate hike in four-and-a-half years. The counter-balancing factor was that the RBI has retained its ‘neutral’ stance. The six-member monetary policy committee (MPC), headed by Governor Urjit Patel, adjusted reverse repo rate to 6 per cent.
The release from RBI said the decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent while supporting growth.
Terming the rate hike as ‘justified’ on account of inflationary trends, global hardening of interest rates as also petroleum prices moving upwards, Dr. Niranjan Hiranandani, founder & CMD, Hiranandani Communities and President (Nation) NAREDCO, said the hike of 0.25 basis points in the repo rate would not make a major difference to real estate. He added that in the long run, “we would prefer rates coming down”.
Recently the major banks like SBI, PNB and ICICI bank increased their MCLR.