EMIs for home, car loans set to go up as banks gear up to raise lending and deposit rates

The festive season may not hold much cheer for those planning to buy a home or a car, thanks to Raghuram Rajan's unexpected move to raise the repo rate. Mortgage and auto loan borrowers may have to pay more as banks plan to raise interest rates in response to the monetary policy announcement.

The central bank governor himself was circumspect when asked how he expects banks to react. "I expect bankers to set rates appropriate to the cost of funding," Rajan said. "I hope they will look into their cost of funding and see how that has changed to take (a) decision. My sense is that is what most of them do. I don't want to micromanage their process. Let us see what they come up with."

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