EMIs on home and car loan to get costlier as RBI hikes repo rate

The Reserve Bank of India (RBI) on Wednesday raised the interest rate by 0.25 per cent on inflationary concerns, this is for the second time in two months. This will to lead to an increase in the interest bank customers pay on loans, be it a home loan, car loan or personal loan.

In over four years the hike in June was the first time the benchmark lending rate was raised and now this is the first time since October 2013 that the central bank has raised the repo rate at two consecutive policy meetings.

RBI in its third bi-monthly policy of the current fiscal the short-term rate at which it lends to other banks, by 0.25 per cent to 6.5 per cent. Monetary Policy Committee (MPC) which is headed by RBI Governor Urjit Patel and which consists of the 6-members, kept its stance at neutral. For July-September, it pegged CPI-based retail inflation at 4.2 per cent which it saw firming up to 4.8 per cent in the second half of the current fiscal.