Last Wednesday, our central reserve bank has increased the interest rate by another 0.35%. As a result, the interest rate for loans has increased to 6.25 percent. The interest rate has been raised to 2.25% since last May. Thus, after February 2019, we have now reached the position of high interest rate.
4 out of 5 RBI’s monetary policy members have taken the decision to raise interest rates based on the sole objective of bringing inflation under control. While the RBI Governor’s statement that “we have the capacity to deal with inflation” is heartening, his warning that the “war against inflation is not yet over” is worrisome.
The reason is that after the RBI governor’s warning, the interest rate may be increased further to 0.25%, experts say. If this is increased, the interest rate on loans will reach the level of 6.50%.
RBI is right in thinking that inflation should be brought under control. At the same time, the common people will have to suffer a lot as a result; We should not fail to note that our economic growth will be greatly reduced.
As a result of the significant increase in the interest rate in the short term, the interest rate on all loans like home loan, car loan, personal loan has gone up to almost 3%. Borrowers are dismayed to see that the home loan, which was supposed to be completed in 20 years, now lasts for more than 25 years.
Businesses are forced to take loans at high interest rates to run their business. When prices are already high, if the prices of goods are raised further to compensate for the increased interest rate, firms will not be able to sell goods; No profit can be earned.
The US Federal Reserve has somewhat limited the pace of interest rate hikes to control inflation. But we are only looking at inflation. The truth is that we fail to notice other things because of it!
It is good for the country and the people that our Reserve Bank realizes that while controlling inflation is important, the development of the country and the common people is also important!
– Teacher