Your EMIs are set to go up; why has RBI suddenly raised the Repo rate by 40 bps

CRR is also up by 50 bps, it means the cost of funds will go up and banks' net interest margins could get adversely impacted

Interest rates in the banking system are set to go up after the Reserve Bank of India on Wednesday 4th May 2022 jacked up the Repo rate

The main policy rate, by 40 basis points to 4.40 per cent and the cash reserve ratio by 50 basis points to 4.50 per cent

Hike will come into effect immediately. Further, the Cash Reserve Ratio has been hiked by 50 bps which will exert further upward pressure on interest rates

It appears that borrowers should prepare for an increasing EMI burden and FD investors can hope for better returns on new FDs

MPC also decided unanimously to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains

There are many signals which indicate that this may be the start of an interest rate hike cycle

As per the global indicators, the retail inflation in the US has risen to 40-year higher to 8.5% in March

The Fed has indicated a hike of 50 basis points (100 basis points = 1%) in its upcoming policy announcement