RBI Policy: RBI Hikes Repo Rate By 50 Basis Points To 5.90%
RBI’s Monetary Policy Committee (MPC) has decided to increase the repo rate to 5.90% by 50 basis points as per RBI Governor Shaktikanta Das statements.
Reserve Bank of India has increased the repo rate or prime lending rate by 50 basis points to 5.90 per cent, RBI Governor Shaktikanta Das said while announcing the decisions of the Monetary Policy Committee (MPC).
The decision by the MPC was announced by RBI Governor Shaktikanta Das. The standard lending rate has increased by 50 basis points to 5.90% by the RBI.
In anticipation of a further rate hike of 50 basis points to rein in excessive inflation, the Reserve Bank’s rate-setting board began its three-day deliberations on Wednesday.
This would be consistent with similar steps taken by other significant central banks, notably the US Fed.
After hiking the short-term lending rate by 40 bps in an off-cycle move in May, the RBI increased the repo rate by 50 basis points in each of the months of June and August based on the proposals of the Monetary Policy Committee (MPC).
RBI Sets Inflation Forecast At 6.7%
The Reserve Bank maintained its inflation forecast for the current fiscal year at 6.7% on Friday despite global geopolitical developments brought on by the war in Russia and Ukraine.
Global inflation, according to RBI Governor Shaktikanta Das, is having a significant negative influence on the domestic economy.
The Reserve Bank of India predicted retail inflation to be 7.1% in the third quarter of 2022–2023.
According to the governor, inflation is anticipated to be 6.5% in the third quarter and then lower to 5.8% in the March quarter with concerns being evenly distributed.
It is anticipated that retail inflation will be 5% in the first quarter of the upcoming fiscal year.
The standard lending repo rate was increased by 50 basis points by the RBI on Friday, bringing it to 5.9%. The goal of the central bank is to manage retail inflation within a range of 2 to 6%.
RBI Cuts Growth Prediction To 7.0%
The Reserve Bank of India cut its growth prediction for the current fiscal year from 7.2% to 7% on Friday, citing aggressive monetary policy tightening throughout the world and a slowdown in demand.
The 5th monetary policy for this fiscal year was announced by RBI Governor Shaktikanta Das, who reaffirmed the commitment of the central bank to maintaining price stability in order to set the nation on a sustained path of growth.
The first three months of the current fiscal year saw a 13.5% increase in real GDP.
Das did issue a warning, stating that forceful monetary policy tightening to combat inflation has caused a third wave of shock to hit the world.
The central bank cut its earlier estimate of 7.8 percent real GDP growth for 2022–2023 in April and revised it to 7.2%.