Loans to get costlier as RBI hikes key lending rate to 3-year high

In a move that will raise borrowing costs for corporates and individuals even further, the RBI Monetary Policy Committee led by Governor Shaktikanta Das hiked Repo Rate by 50 basis points to 5.90 percent on Friday.

Repo is the rate at which Reserve Bank of India lends funds to commercial banks when needed. It is a tool that the central bank uses to control inflation. This is the third hike since the beginning of the current financial year, taking the rate is back to pre-pandemic levels in order to tame the inflationary pressure.

The six-member Monetary Policy Committee headed by Reserve Bank of India Governor Shaktikanta Das started deliberations on the bi-monthly policy review on Wednesday.

Adressing a press conference, RBI Governor Shaktikanta Das said that there is nervousness in financial market, global economy eye of new storm. He added that Indian economy continues to be resilient in midst of global turmoil.

World is in midst of third major shock from aggressive monetary tightening by central banks, Das said.