new Delhi. The US central bank, the Federal Reserve, has increased its interest rates by a quarter percent (0.25 percent) after nearly three years. This increase has been done to curb the unbridled inflation. Now experts are speculating that the Reserve Bank of India (RBI) can also take such a step.
RBI Governor Shaktikanta Das has already raised questions about rising inflation many times. In February, with the rate of retail inflation going out of the Reserve Bank’s fixed 6 percent range, it also reached a record level of 8 months. In such a situation, a decision can be taken to increase the repo rate in the Monetary Policy Committee (MPC) meeting to be held in April to contain inflation.
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Inflation at the top of 40 years in America
The rate of consumer-based inflation in the US has reached the highest in 40 years. In Canada too, retail inflation is running at a 30-year high. This is the reason that now central banks around the world are raising their interest rates again. The head of the US Fed Reserve, Jerome Powell, has spoken of raising interest rates six times in 2022. That is, it can increase by about 1.5 percent.
The interest rate was reduced to deal with the corona epidemic
Central banks around the world, including the RBI, cut their policy rates to deal with the pressure of the Corona epidemic in 2020. The Reserve Bank reduced it by more than 2.5 percent to 4 percent, which is the lowest level since the year 2000. This is the reason that for the last one and a half years, the interest rates of banks’ loans have been running very low.
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Now the era of cheap loans will end
Experts say that following the US Fed Reserve, if the Reserve Bank also starts raising interest rates, then the era of cheap loans will end. It is estimated that from the April meeting itself, the Reserve Bank will start increasing its repo rate and reverse repo rate. At present, banks have started increasing the interest rates of retail loans, which is expected to rise further.
Tags:, RBI, RBI Governor, Shaktikanta Das
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