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MUMBAI: Consumers may have to cough up more for housing and car loans as the Reserve Bank of India has made it a bit costlier for banks to borrow money.
The RBI on Tuesday upped economic, growth, projections to 7.5-8 percent and hiked by 0.25 per cent the interest rate at which it buys and sells bonds to commercial banks to keep inflation in check.
The short-term rates could probably go up. Hence, debt market instruments locally could see an upward trend in the interest rates. Several banks, including Bank of Baroda have indicated that they may hike deposit rates, but spare lending rates.
The central bank spared changes to interest rates by leaving the benchmark bank rate untouched at six per cent. It also left cash reserve ratio at the present level of five per cent. (CRR is the percentage of cash that banks are mandated to deposit with the Reserve Bank.) Repo, a financial instrument used for raising capital from commercial banks to suck out excess liquidity, has gone up to 5.50 per cent and reverse repo rate to 6.50 per cent. The reverse repo rate was hiked to maintain the one per cent difference between the two instruments.
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