New Delhi, Sep 30, 2022: For the fourth time in a row, the Reserve Bank of India (RBI) on Friday hiked the repo rate by 50 basis points (BPS) to 5.9 per cent with immediate effect.
A six-member Monetary Policy Committee (MPC) began its three-day meeting on September 28 to deliberate on the prevailing economic situation.
The repo rate is the interest rate at which the central bank lends to commercial banks.
This is the RBI’s fourth rate hike in the current financial year. In its off-cycle monetary policy review in August, the RBI increased the repo rate by 50 basis points (bsp) to 5.4 per cent.
Earlier in May, the RBI hiked the policy repo rate by 40 basis points or 0.40 per cent to 4.40 per cent. Then in June, the RBI further raised the rate to 4.90 per cent, a 50 basis points increase. Overall, the central bank has raised the benchmark rate by 1.90 per cent since May this year.
The Consumer Price Index (CPI) based inflation, which the RBI factors in while fixing its benchmark rate, stood at 7 per cent in August. Retail inflation has been ruling above the RBI’s comfort level of 6 per cent since January this year.
RBI governor Shaktikanta Das retained the inflation projection at 6.7 per cent for the current fiscal while slashing the real GDP growth estimate to 7 per cent from the earlier forecast of 7.2 per cent for FY’23.
The latest RBI action follows the US Federal Reserve effecting the third consecutive 0.75 percentage point interest rate increase, taking its benchmark rate to a range of 3-3.25 per cent earlier this month.
Courtesy: India Today