The Reserve Bank of India (RBI) announced an increase in the repo rate by 35 basis points (bps) due to intolerable inflation in the Indian market. After the fifth consecutive increase, the repo rate is now 6.25%. The Standing Deposit Facility has increased to 6%. The reverse repo rate stands at The six-person Monetary Policy Committee gave their verdict on Wednesday, with a majority decision of five out of six members.
The Marginal Standing Facility Rate increased to 6.50%. Bank Rate (6.15%), Fixed Reverse Repo Rate (3.35%), Cash Reserve Ratio (4.50%) and Statutory Liquidity Ratio (18.00%) remain unchanged. RBI has predicted inflation for the financial year 2023 at 6.7%. Inflation in the first and second quarters is expected to be 5% and 5.4%, respectively. RBI plans to bring down inflation below 6% and closer to 4%.
The first increase in Repo Rate this year was in May, from 4% (October 2020) to 4.40%. Since then, the increase in repo rate has been as follows –
| Effective Month | Repo Rate | % Change |
| December 2022 | 6.25% | 0.35% |
| September 2022 | 5.90% | 0.5% |
| August 2022 | 5.40% | 0.5% |
| June 2022 | 4.90% | 0.5% |
| May 2022 | 4.40% | 0.4% |
While talking about the economic growth of India, the main support is drawn from rural manufacturing and service sectors. The Gross Domestic Product is reduced to 6.8% from the previous estimate of 7%. Governor Shantikanta Das mentioned that the Indian Rupee appreciates by 3.2% while other foreign currencies depreciate. He said the foreign exchange reserves rose to $550 billion in the last week of November.
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| Repo Rate | What is Current Repo Rate? |
| Repo Rate and EMI | Difference Between Repo Rate and EMI |
| Bank Rate | What are Bank Rate? |
While considering real estate, the 35 bps repo rate hike will reduce the residential sales momentum across the property market. This fifth consecutive hike will make loans expensive. The hike will affect EMIs and decrease home affordability. However, the hike bodes well with the incomplete projects as banks would moderate the possession timeline.
The increase in the repo rate, up until now, has been constant this year. The current policy rate has been the highest since August 2018.
