Now Reading: SBI Research warns of rate hikes, home loan EMI may rise Rs 1,583
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SBI Research warns of rate hikes, home loan EMI may rise Rs 1,583
SBI Research warns of rate hikes, home loan EMI may rise Rs 1,583
Retail inflation in India rose to 4.82% in August, the highest in eight months, up from 4.45% in July. Wholesale inflation also climbed to 9.92% in the same month. Rising prices of…
Retail inflation in India rose to 4.82% in August, the highest in eight months, up from 4.45% in July. Wholesale inflation also climbed to 9.92% in the same month. Rising prices of daily essentials like onion, garlic and ginger have squeezed household budgets.
SBI Research has advised the RBI to hike the repo rate by 25 basis points each in October and December. If the central bank follows this and banks pass on the full 50 basis point increase, a Rs 50 lakh home loan for 20 years at 8.25% would see EMI rise to Rs 44,186 from Rs 42,603, an extra Rs 1,583 per month.
The RBI has kept the repo rate unchanged at 5.25% for four consecutive meetings. All eyes are now on the next Monetary Policy Committee meeting from October 5 to 7, which will decide on rates based on inflation, crude oil prices and economic conditions.
Indian Opinion Analysis
SBI Research's advice is not binding on the RBI's MPC, which has held rates steady through four meetings despite inflation concerns. The MPC's mandate is to keep retail inflation at 4% with a tolerance band of 2 percentage points on either side. August's reading of 4.82% sits within that band, but the trajectory matters. A key variable is crude oil: India imports over 85% of its oil needs, so a sustained move above $100 per barrel could widen the trade deficit and put pressure on the rupee, complicating the RBI's rate calculus. The MPC's next decision on October 7 will signal whether it prioritises growth support or inflation containment.
The RBI's next MPC decision on October 7 will show whether it prioritises growth support or inflation containment.
Source: bazaar.businesstoday.in
This brief was synthesised by AI from the source linked above.
