On Increase in repo rate by S Ravi, Former Chairman of BSE:
RBI increasing the repo rate by 25 bps to 6.5% is in line with what other central banks are doing as well as the market expectations in view of certain indicator pointing out that inflation has begun to ease.
Purohit Vahini 
RBI increasing the repo rate by 25 bps to 6.5% is in line with what other central banks are doing as well as the market expectations in view of certain indicator pointing out that inflation has begun to ease. However, RBI will continuously monitor the trends and may increase the repo rate by few basis points in the next few months to achieve the targeted inflation of 5.3% in FY 2024.
This repo rate hike is likely to make the business loans costlier as well as the retail consumer loan products including the home loans. This will result in borrowers paying more towards the EMI and extending the tenor of loan. On the other side, the rate hikes may push individuals to invest their money in fixed deposits as banks and NBFCs are providing attractive interest rates. This in turn will provide a check on the consumption demand. However, the upward tweak in rates will have to be balanced carefully so that the GDP growth rate pegged at 7% in the current financial year and 6.4% in FY 2024 are met.
