The Congress on Wednesday attacked Prime Minister Narendra Modi after the Reserve Bank of India (RBI) , citing rising inflationary pressure.
Reacting to the RBI’s decision in a post on social media platform X, the Congress party said, “‘Mehangai Man’ Modi ka kahar jaari hai. Ab janta ki kamar aur todi jaayegi, (‘Inflation Man’ Modi’s reign of terror continues. Now the public’s back will be broken even further).
The Congress said the RBI’s 25-basis-point hike to 5.5% would . “This means your home loan, car loan, personal loan, and business loan interest rates will now increase,” the party said.
It further claimed that borrowers would have to pay higher EMIs and could also face longer loan repayment periods.
“Vaada ‘achhe din’ ka tha, lekin mile vasooli wale din,” (The promise was of ‘good days,’ but what we got were days of extortion), the Congress said.
The RBI’s decision came against a backdrop of higher global food and energy prices, financial market volatility and tighter global financial conditions.
The Monetary Policy Committee (MPC) unanimously voted for the increase after its three-day meeting from October 5 to 7. The central bank also changed its policy stance to “calibrated tightening”, signalling that rate cuts are unlikely in the near term.
RBI Governor Sanjay Malhotra said the . “Inflation and its outlook are not as benign as they were last year,” Malhotra said.
He added that headline consumer price inflation is expected to average around 5.8% over the next three quarters. For the full financial year, inflation is projected at 4.4%.
The RBI also pointed to several global factors that could keep inflation and financial markets under pressure. Malhotra said global economic growth remains resilient but is expected to slow this year. At the same time, higher energy and food prices are pushing inflation upwards and prompting several major central banks to tighten monetary policy.
Lingering trade uncertainty is another concern. Rising bond yields in advanced economies and an appreciating US dollar are also adding to volatility in global financial markets.
The RBI Governor said these factors have made the inflation outlook more uncertain and need to be closely watched.
A , particularly for loans linked to external benchmarks. Existing borrowers with floating-rate loans could see their interest rates, EMIs or loan tenures change if lenders pass on the increase. New borrowers could also face higher interest rates.
However, the impact will depend on the type of loan, the lender’s benchmark and how quickly banks and financial institutions transmit the RBI’s rate hike.
For households already dealing with higher expenses, the increase could add to the cost of borrowing.
The latest rate hike also marks a shift in the RBI’s approach after a long period of easing. With the stance now changed to “calibrated tightening”, borrowers and markets will closely watch the central bank’s next moves on inflation and interest rates.