Home, car loans to rise further; RBI hikes key lending rate

[navdeep]

nterest rate on housing, vehicle and other consumer loans is likely to shoot up further, with Reserve Bank of India on Friday raising key short-term lending rate (repo*) by a quarter per cent as also increasing mandatory deposits by banks by 0.5 per cent to contain inflation.
Ahead of its annual monetary policy scheduled next month, the RBI in a sudden move hiked the repo rate and Cash Reserve Ratio** to 7.75 per cent and 6.5 per cent, respectively to suck out about Rs 19,500 crore (Rs 195 billion0 from the system.
The RBI move is a part of the stated policy by Finance Minister P Chidambaram that the government and apex bank would continue to take appropriate fiscal and monetary measures to control inflation, which is hovering at a high of 6.46 per cent.

Home, car loans to rise further

[rahul_intlad]

Looks like the government just wants to put a brake on the Indian automobile industry,first it just completely forgot about the industry in this years budget and now this rate hike.

No wonder automobile stock prices are heading southwards

[santhoshx]

This has an adverse effect on markets too, SENSEX down more than 500 points

[cpserrao]

Originally Posted by santhoshx

This has an adverse effect on markets too, SENSEX down more than 500 points

Auto companies are taking it on the chin. both Tata Motors and Maruti are down 7.5% + at 14:50 hrs

[mithun]

But it seems to be like that increase will be reverted after the current inflation rate is stabilised.