RBI hiked repo rate, the rate at which the central bank lends short term money to commercial banks, by 25 basis points (0.25 per cent) to 6.50 percent. This is expected to lead to higher interest rates on housing, auto and other personal loans. This is first time in nearly five years that RBI has hone for a back to back hike, having increased repo rate by 25 bps to 6.25 percent in its last policy meet in june. Last time RBI had increased the repo rate consecutively in 2013. Trade tensions, crude oil prices, poor economic activity, rising retail inflation have been considered as the primary factors behind the hike in repo rate.
I think that hike in repo rate will impact the real estate sector as the revised rate would result in costlier EMIs for the home loan.
