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RBI MPC hikes repo rate by 50 bps as inflationary pressures intensify
- RBI MPC voted unanimously to hike the benchmark interest rate by 50 bps
- Standing Deposit Facility (SDF) rate is adjusted to 5.15%.
- Marginal Standing Facility (MSF) and bank rate are revised at 5.65%
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced that the Monetary Policy Committee voted unanimously to hike the benchmark interest rate by 50 basis points (bps) to 5.4% with immediate effect.
The Standing Deposit Facility (SDF) rate is adjusted to 5.15%. The Marginal Standing Facility (MSF) and bank rate are revised at 5.65%.
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The RBI Policy stance is retained at Withdrawal of Accommodation.
RBI Governor Shaktikanta Das while delivering his MPC statement said, the Indian economy is impacted by global situations. The globalisation of inflation coincides with de-globalisation of trade, he said.
Consumer price inflation has eased from its surge in April but remains uncomfortably high and above upper threshold of target, Das said.
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Volatility in global financial markets is impinging upon domestic financial markets leading to imported inflation. “Inflation is expected to remain above the central bank’s 6% threshold in the second and third quarters of this fiscal year, for which the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium,” he added.
Also Read | CPI inflation for FY23 projected at 6.7%: RBI governor
The Real GDP growth projection for FY23 retained at 7.2% with Q1 at 16.2%, Q2 at 6.2%, Q3 at 4.1% and Q4 at 4% with risks broadly balanced. The real GDP growth for Q1 FY24 is projected at 6.7% said RBI Governor Shaktikanta Das.
The RBI MPC has retained the CPI Inflation projection for FY23 at 6.7%. The second quarter CPI is seen at 7.1% compared to 7.4% previously, while Q3 CPI is seen at 6.4% against 6.2% projected earlier. The Q4 CPI projection is retained at 5.8%. The Q1 FY24 CPI is seen at 5%.
Also Read | Explained: Impact of RBI’s repo rate hike on deposits, loans
Governor Shaktikanta Das also said that RBI will remain vigilant on the liquidity front, and conduct two-way fine-tuning ops as warranted (VRR and VRRR). Will do fine-tuning ops on both fronts depending on evolving liquidity conditions, he added.
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