6th straight RBI rate hike set to make home loans costlier

MUMBAI/DELHI: Home loans and other borrowings will get more expensive, with the RBI raising its key policy rate by 25 basis points on Wednesday. The sixth consecutive rise since the RBI started hiking rates in May 2022 has resulted in a 250 basis points increase in interest rates.

The monetary policy committee voted 4:2 in favour of increasing the repo rate—the rate at which RBI lends to banks—to 6.5% from 6.25% earlier. The rate hike will immediately impact individual borrowers and small businesses as most retail loans are linked to the repo and get re-priced immediately.

Announcing the MPC decision, RBI governor Shaktikanta Das said inflation was moderating, and the worst is behind us. “The stickiness of core or underlying inflation is a matter of concern. We need to see a decisive moderation. We have to remain unwavering in our commitment to bring down inflation,” he said.