Indian central bank raises rates for second time

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An RBI repo rate hike usually sees commercial banks hike their respective interest rates on home, vehicle and other loans.

"Longer term fixed rates are likely to be more popular now among borrowers as they try to protect themselves from future base rate rises".

Here, we have selected eight to answer. It kept its oneyear rates unchanged at 8.95 per cent.

The same may be true this time, with banks and building societies relatively choosy about which accounts and what level of savings will receive a better return.

If you're one of them, it's likely your monthly payments will now increase.

It is very unlikely and investors certainly do not expect another rise for about a year.

"That will then force the banks to push through the bank rate rise".

It forecasts that growth rebounded to 0.4 per cent in the second quarter, with data pointing to a similar rate of growth between July and September.

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The BoE signalled it was in no hurry to raise interest rates further as Brexit approaches.

Alex Day asks: Will this affect the interest rate on student loans?

The BoE's message for rates remained one of gradual and limited increases as it saw inflation only a fraction above its 2 percent target over the next few years.

As an internal benchmark or reference rate for banks, the Marginal Cost of Funds-based Lending Rate (MCLR) is the minimum interest rate of a bank below which it can not lend to the loan seekers. The RBI cited rising crude oil prices, volatility in global financial markets, and uncertainty around the full impact of MSP (minimum support price) on inflation among the key factors for its rate-hike decision.

"Higher interest rates should also provide some much-needed relief to savers who have seen their investment returns eroded significantly since the financial crisis", says Sentance.

The Pound-to-Dollar exchange rate was quoted at a high of 1.3033, but is now down at 1.3032.

Kallum Pickering, Senior Economist with Berenberg Bank, agrees that the avoidance of chaotic Brexit will pave the way for a steeper path of interest rate rises.

Some investors think the risk of a global trade war is another reason for caution. "Policy needs to walk, not run, to stand still", he said.

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All savings products linked to the base rate will move in line with the increase from the end of August.

A quarter-point rise will add around £16 a month or £192 a year to the average mortgage.

Sam Southby asks: I now have a mortgage in principle with the bank.

EUR/GBP at 0.90 gives a GBP/EUR exchange rate of 1.11.

Around two thirds of its mortgage customers are now on fixed-rate products and so will not see their rate change during their fixed-rate period.

What does the interest rate rise mean for me?

The rate rise may be good for retirees looking to buy an annuity - or a guaranteed income.

William Burrows, of Better Retirement, says: "Annuity rates have been in the doldrums since the European Union referendum in 2016, when gilt yields fell dramatically".

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Thirty-seven of 63 economists in a Reuters poll last week said the RBI will raise rates n Wednesday, while 22 said the next hike would come later this year, or early in 2019. However, just like the rise in November, providers are likely to be selective with the rates they choose to increase. Nearly all (96%) of new mortgage loans are offered on a fixed rate, usually for the first two or five years.

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