Your EMI may reduce RBI may reduce repo rate due to inflation

The major decline in retail and wholesale inflation in the month of April has given relief on many fronts. Retail inflation based on the Consumer Price Index (CPI) is at an

18-month low of 4.7 per cent. At the same time, after 34 months, the wholesale inflation slipped below zero and stood at -0.92 percent. Retail inflation remained below the Reserve

Bank's comfortable level of 6 per cent for the second consecutive month. In such a situation, it is expected that the Reserve Bank can give relief in the policy rate (Repo Rtae).

This can reduce the monthly installment (EMI) of the loan. Relief from WPI: Rise in inflation rate of pulses, rice, wheat, milk prices heavy on pocket The retail

inflation rate remained above the prescribed range of RBI for the last 13 months. In January and February this year, it was above six per cent. There was some decline in it in

March, but still it was at 5.66 per cent. The Reserve Bank mainly looks at retail inflation while considering monetary policy. The central bank is entrusted with the responsibility

of keeping inflation at 4 per cent with a range of 2 per cent. To bring inflation under control, the RBI had to increase the repo rate by 0.25 percent in the monetary review

meeting in February. 2.50 percent increase in repo rate RBI started the process of increasing the repo rate from the month of May 2022 to control the sharp jump in

inflation. Between May 2022 and February 2023, the repo rate has been increased by 2.50 a total of six times. Right now the repo rate remains at 6.50 percent. After this, the banks

also increased the interest rates of their loans, due to which all types of loans including housing and vehicles became expensive. Due to this, there was a continuous increase in

the EMI of the people. However, the repo rate was not increased in the monetary review meeting held in April. This is how the effect of increasing the repo rate By

increasing the repo rate, the Reserve Bank reduces the liquidity of capital i.e. cash flow from the market so that the inflation rate can be controlled. Increasing the repo rate of

RBI increases the pressure on all banks to increase the interest rates on loans and they have to make the interest rates on other types of loans, including home loans, costlier,

the effect of which is to be borne by the borrowers in the form of increased monthly installments. Does matter. Relationship between inflation and interest rates

According to economic experts, when the loan is cheap, due to the EMI, people take loans and spend freely. Cheap credit increases the purchasing power of the consumers. On the