Home, auto and other loan EMIs will rise after the Reserve Bank of India (RBI) on Wednesday raised the key interest rate by 50 basis points, the second increase in five weeks, to rein in a rise in prices that was seen continuing to hurt consumers in the near term.
The increase in lending rate or the repurchase rate (repo) by 50 bps, the biggest in more than a decade, to 4.90% comes on the back of a 40 bps hike last month at an unscheduled meeting that kicked off the tightening cycle.
Simultaneously, the pandemic-era accommodative stance was dropped, which meant more hikes may be in the offing to tame inflation that since the start of the year has been hovering above the central bank's upper tolerance limit.
