Q. .. Which of the following will likely be the impact of the increasing repo rate?:
1.It will increase Equated Monthly Instalments (EMIs).
2.It will lead to the option of floating interest rate.
3.It will increase Marginal Cost of Funds-Based Lending rates (MCLR).
4.It will increase demands for home loans.
Select the correct code given below:

[A] 1, 2 and 3 only

[B] 2, 3 and 4 only

[C] 2 and 4 only

[D] 3 and 4 only

Answer: A

Explanation –

Statement 1, 2 and 3 are correct. An increase in the repo rate will lead to increase in EMIs, increase in MCLR and people might opt of floating interest rate.

Statement 4 is incorrect. An increase in the repo rate will reduce the demand of home loans.

Source: ForumIAS