Policy Review: Rates may increase again today, know how much has changed since the last hike

In view of foreign signals with the rise in inflation rate, it is estimated that the Reserve Bank may increase the key rates by half a percent in today’s policy review. which will make loans more expensive

Rates may increase again today

The EMI of your loan and how much is going to increase, it is going to be open in a few hours from now. The Reserve Bank will announce the results of its policy review today. Markets and experts have already given estimates, the Reserve Bank will increase interest rates by up to half a percent. There are several solid reasons behind these estimates. In fact, since the last review, many such signs have been seen, due to which the pressure has been put on the Reserve Bank to increase rates. Know what has changed since the last review.

inflation rate

There was a relief in inflation rate since April. With the reduction of rates by the Reserve Bank, there was a softening in it. However, since July, once again there has been an increase in inflation. Food inflation was above 8.3 per cent on April 1. At the same time, retail inflation was around 8 percent. By May 1st, retail inflation came down to 7 percent. During this period, food inflation reached below 8 percent. The cut in edible oil prices showed further difference and both food inflation and retail inflation reached below 7 per cent in July. However, during the monsoon, food prices rose sharply in August, where food inflation jumped above 7.5 percent. At the same time, retail inflation has also reached back to 7 percent. Due to the inflation data for August, the market is assuming that the Reserve Bank can increase the rates by half a percent.

rupee against dollar

The biggest impact that has been seen with the hike in rates by the Federal Reserve is the weakness in the rupee against the dollar. At the beginning of the financial year i.e. on April 1, the rupee was at the level of 76 against the dollar. With the fall, on July 13, the rupee broke the level of 80. At the time of the last policy review, the rupee was trading slightly above the level of 79. Now that the Reserve Bank was reviewing the policy, the rupee has also broken the level of 82 against the dollar. That is, the rupee has lost 3.8 percent since the last review.

foreign exchange reserves

At present, the thing that the Reserve Bank of India is most positive about is India’s foreign exchange reserves. Many developing countries around the world are on the verge of collapse due to weak reserves. However, India’s foreign exchange reserves are still in a strong position. However, if you look at the figures, the situation is starting to get a little uncomfortable. Before the last policy review, India’s foreign exchange reserves stood at a level of $ 573.9 billion. This has come down to $545 billion before the policy review to be held at the end of September. That is, between the two reviews, the foreign exchange reserves have decreased by $ 29 billion. How big is this decline, it can be estimated from the fact that the total foreign exchange reserves of Pakistan, Sri Lanka and Nepal are also not that much. The eyes of the market are also on the currency reserves coming today.

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Federal Reserve hike

At present, the most aggressive stance among central banks is that of the Federal Reserve. The impact of Fed’s decisions is being seen all over the world. The Federal Reserve had started raising rates before the Reserve Bank. On July 27, just before the Reserve Bank’s August review, the Federal Reserve increased rates by 75 basis points, or 0.75 percent. And the rates had risen to between 2.25 percent to 2.5 percent. At the same time, recently i.e. on September 21, the Fed has once again increased by 75 basis points i.e. 0.75 percent. At present, the rates have increased to between 3 and 3.25 percent.