RBI Rate Hike

27 Jul

The chain of recent rate hikes by RBI, including the one yesterday, is going to hit the pockets of middle class severely. The increase in repo and reverse repo rates will make owning homes and cars dearer, putting pressure on middle class to stay where they are in terms of infrastructure and lifestyle.

This will also hit the recovering housing industry and booming automobile industry. That means less jobs in those areas. Even the banking industry gets hit by lower volumes in these loan segments.

Not sure how much impact the current increase will have on inflation (given that this is the 11th increase since March 2010). Given the recent hikes in petrol and diesel, which will have their own impact on prices across the board, the positive impact of the repo and reverse repo hikes may be minimal or null.


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