RBI followed other central banks in using rate hikes to combat rising inflation. RBI governor Shaktikanta Das pointed out that inflation was not the only reason behind the multiple rate hikes.
Impact Of Repo Rate Hike
Indian shares rose on Friday to record their best quarter in a year, boosted by banks and metal stocks. The share market was reacting to the news of the RBI rate hikes.
The Nifty 50 index ended up 1.6% at 17,094.35, and the S&P BSE Sensex gained 1.8% to 57,426.92. Both the indexes posted their biggest jump in nearly a month after being down for the last seven days.
Retail banks often raise lending rates after an increase in repo rates, which might put additional pressure on people currently paying EMIs for loans.
Meanwhile, banks do not necessarily raise their annual returns on savings schemes after a repo rate hike. As a result, investors should remain vigilant before making any fresh investments.