How RBI repo rate hike may impact fixed deposit, loan & real estate industries?

A hike in the RBI repo rate directly impacts the loan and real estate industries, as well as the fixed deposit industry. 

When the repo rate is increased, the cost of borrowing from RBI for banks also increases, which leads to an increase in the interest rates for loans. This causes a decrease in demand for loans, as people are not willing to pay a higher rate of interest. In turn, the real estate industry is affected, as people are less likely to purchase property with a higher cost of borrowing. The fixed deposit industry is also impacted, as banks tend to hike their fixed deposit rates to attract more deposits, in order to offset the higher borrowing costs. 

Fixed Deposit: A rise in the repo rate may lead to a rise in the interest rates offered by banks on fixed deposits. This may lead to an increase in the returns earned by individuals on their fixed deposit investments. 

Loans: A rise in the repo rate has an inverse impact on loans. It leads to an increase in the interest rates charged by the banks on the loans. This in turn increases the cost of borrowing for individuals, businesses, and other entities. 

Real Estate: A rise in the repo rate may lead to an increase in the cost of home loans, which may further lead to a decrease in demand for real estate. This may lead to a fall in real estate prices in the short term.