Home, auto loans to be costlier

RBI rate hike worries real estate sector

RBI rate hike worries real estate sector

Ironically, though the RBI has behaved on expected lines, it has increased interest rates twice while maintaining its "neutral" stance. The apex bank said the models suggests FY20 real GDP growth will range from 7.4 per cent to 7.9 per cent.

The overall banking system liquidity continues to be pressured, with liquidity deficit witnessing a sustained increase in the last three weeks.

Five of the six members on the rate panel voted for the rate increase.

In the shorter term, the Bank Rate implied by a so-called equilibrium real interest rate, or "r*", was likely to be somewhat lower, the BoE said but it did not give an estimate.

The central bank said inflation in two years' time was likely to be 2.09 percent, above the BoE's 2 percent target.

"There might not be much urgency in delivering back-to-back rate hikes when the policy stance is still neutral".

The governor said trade skirmishes have "evolved into tariff wars and now we're possibly at the beginning of currency wars". With the new hike, home loans and EMIs are expected to become costlier.

Here's Brooks one last time: "Earlier this year the BOE Governor Mark Carney said that the Bank would give its view on the latest equilibrium, or neutral, interest rate for the United Kingdom economy".

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Changes to the Bank rate affect tens of millions of savings accounts, loans and mortgages.

The RBI's policy statement also mentioned that minimum support price (MSP) hike as the primary factor stoking inflation this year.

Adhil Shetty, CEO, BankBazaar.com: "In June, several leading banks including SBI had increased their MCLR".

They typically last for two or five years - and of course the rate doesn't rise during that period. In a rising rate scenario, it makes vast sense for customers repaying loans to make periodic principal pre-payments.

"Scotland's growth over the last three years has lagged behind the United Kingdom, so whilst the Bank may judge that the United Kingdom economy is in sufficiently robust health to cope with a rate hike, a rate rise in Scotland may be more of a challenge". In a world where protectionism is the new normal, Indian business can certainly do with some government & RBI actions that are focused on driving growth.

The decision, which will be announced alongside the Bank's quarterly inflation report, would bring to an end nine and a half years in which Bank rate was at or below 0.5%.

While most economists and analysts remained divided on whether the RBI would hike rates, a vast majority had expected a rate hike, just like happened in the June meeting.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said: "With the vast number of lenders increasing rates in the lead up to May's rate announcement, providers have chosen to keep rates relatively static in the run-up to this one, having already been prepped for a rise". Markets are pricing a more than 90% chance of a hike, according to the latest data.

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