RBI Interest Rate: Since the Reserve Bank of India (RBI) is anticipated to keep the repo rate at 6.50 percent, you might not see a decrease in the equivalent monthly interest (EMI) you pay on house loans until the second quarter of 2024. According to a recent study of experts by the news organisation Reuters, the high interest rate will likely last until the end of March 2024. The economists’ forecast is mostly based on ongoing inflation. Inflation jumped to 4.81 percent last month despite a four-month downward trend because of higher food prices.
RBI’s Cautious Stance Delays Anticipated Rate Cuts
For the fiscal year that begins on April 1, 2023, and ends on March 31, 2024, economists forecast that inflation would typically exceed 5%. Considering that this is greater than the RBI’s medium-term aim of 4%, there is little need for the central bank to change its stance. The RBI was expected to lower the repo rate by 25 basis points by the end of March 2024, followed by another 25 basis point reduction in the quarter from April to June, according to analysts surveyed in June. The first rate drop is now anticipated to occur in the second quarter of 2024, delaying these earlier forecasts. The RBI’s cautious stance is to blame for the delay in rate decreases.
Chief Economist Warns of Prolonged Rate Hold
“They are not going to be very decisive in cutting rates and that is why we believe this pause . may remain for a longer period unless there are clear signs of a slight weakness in growth or core inflation coming down,” said Suman Chowdhuri, chief economist at Acuite Ratings and Research, told the news agency. You could not notice a decrease in your EMIs if you have an active house loan until the middle of 2024. The reason for this is that these loans are closely correlated with the bank’s repo rate, which is set by the RBI. Bank interest rates are unlikely to decrease as long as the RBI keeps its present repo rate in place, leaving borrowers’ EMIs steady.
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