RBI repo rate hike: Das said India’s inflation projection for the financial year 2022-23 has been retained at 6.7 percent.
The Reserve Bank of India has hiked the repo rate by 50 basis points. This is the third such increase in the past four months. RBI has been trying to tame the spiraling inflation which has been in the north of the permissible 6 percent limit. In the previous two months, RBI has upped the repo rate by 40 basis points and 50 basis points respectively.
The monetary policy committee (MPC) raised the key lending rate or the repo rate to 5.40%. The Standing Deposit Facility rate and the Marginal Standing Facility rate were accordingly adjusted higher by the same quantum to 5.15% and 5.65%, respectively.
Explaining the RBI’s decision, Governor Shaktikanta Das said the consumer price inflation remained “uncomfortably” high and the inflation will likely remain above the six percent mark.
Das said India’s inflation projection for the financial year 2022-23 has been retained at 6.7 percent on the assumption that the monsoon remains normal and the global crude oil prices don’t exceed 105 dollars per barrel.
He also referred to the risk of recession saying IMF has revised downwards its economic growth projection.
“The Indian economy faces headwinds from global factors like geo-political risks,” he added.
He, however, said India’s Financial sector remains well capitalized. “India’s forex reserves provide insurance against global spillovers,” he added.
Ahead of the RBI announcement, the country’s market showed an upward trend. The NSE Nifty 50 index was up 0.23% at 17,421.35, as of 0346 GMT, and the S&P BSE Sensex rose 0.21% to 58,418.86.
The central bank will continue calibrating policy to preserve and foster macroeconomic stability while bringing down inflation, RBI governor Shaktikanta Das said last month, adding that there could be some respite from rising prices in the coming months.
This story has not been edited by News Mania staff and is published from a syndicated feed
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