After nearly 4 years, the Central Reserve Bank has increased the repo rate. This increase is 0.40 percent. With this, the repo rate fell to 4.40 percent. Although the decision of the Reserve Bank of India is to control inflation, given the current situation, everything is not so easy.
How are the conditions: If we look at the changing environment after the war between Russia and Ukraine, food inflation is expected to increase further. Apart from this, after the ban on palm oil export by Indonesia, edible oil prices will rise in India. This is said because India was importing palm oil from Indonesia on a large scale.
The global wheat shortage is affecting domestic prices. However, there is no crisis of any kind on the domestic show. Despite this, the impact of the global environment is clear. According to Food Minister Sudhanshu Pandey, the center’s purchases of wheat in the current marketing year in Rabi are likely to be half of those of 19.50 million tons amid rising wheat exports and a possible drop in production. Aside from this jump in fertilizer prices, other costs had a direct impact on food prices.
What the experts say: Deloitte India’s Rumki Mazumdar said: “There was a possibility of a repo rate hike in June. The Reserve Bank of India’s sudden move to increase the repo rate just one month ago shows that it does not want to wait and wait but act. Instead, it is ready. To take quick steps to contain inflation before it derails the economic recovery path.
Pradeep Multani, president of the Chamber of Commerce with a doctorate in industry, said the RBI’s move was aimed at containing inflationary pressures. But the increase in repo rate and CRR (Cash Reserve Ratio) will affect consumer and business sentiment. He said the economy is still recovering from the effects of the pandemic. There is also a global crisis from above. In such a situation, the increase in the repurchase rate will have a significant impact on trade and finance.
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Impact on real estate: The Reserve Bank’s decision to raise key policy rates will affect real estate growth and may hurt home demand. Industry experts expressed this concern.
More improvements now: Rahul Bagoria, chief Indian economist at British brokerage Barclays, said he expects the Reserve Bank of India to raise the repo rate by at least 0.50 per cent at the next meeting to be held in early June and only after it touched 5.15 per cent. It gives some relief.