Ranjeet Mudholkar, Vice Chairman and CEO, FPSB India on the Third Bi – Monthly Monetary Policy for FY 2018-2019

“The Reserve Bank of India’s decision to hike the repo rate by 25 bps to 6.5% was along expected lines given that the headline inflation rose for the third consecutive month in June to 4.6 percent. The central bank has forecast inflation to rise to 5 percent in the first quarter of FY20, while there is a marginal rise in inflation expectation for the second half of the current fiscal. With these kinds of projections the market will be factoring in a couple of more rate hikes during the current fiscal year. The State Bank of India had already anticipated the rate and raised its deposit rate by 5 to 10 bps a couple of days back. With this second rate hike this year, we can expect banks now to raise lending rates leading to costlier loans for consumers. So individuals will have to brace for higher EMIs. Lending rates factor in the repo rate as well as banks’ cost of funds.”