The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) hiked the key lending rate, the repo rate, by 50 basis points, taking the policy rate back to the pre-pandemic levels, the highest since August 2019. With the latest hike, from the six-member rate-setting panel, the repo rate now stands at 5.4%. The Repo rate is the rate at which the central bank lends short-term funds to banks.

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Here are the key highlights of the RBI’s fourth monetary policy review for financial year 2022-23 announced by Governor Shaktikanta Das:

1. Key short-term lending rate (repo rate) was hiked by 50 basis points (bps) to 5.4%, the third consecutive hike this year.

2. Overall, the repo rate has been increased by a 140 bps hike since May 2022 to control inflation.

3. Gross Domestic Product (GDP) growth projection for the financial year 2022-23 retained at 7.2%.

4. Real GDP growth projection for April-June seen at 16.2%, July-September GDP growth seen at 6.2%, October-December GDP growth seen at 4.1%, and January-March 2023 GDP growth seen at 4.0%.

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5. Real GDP growth for the April-June quarter of fiscal 2023-24 is projected at 6.7%.

6. RBI Governor said domestic economic activity is showing signs of broadening whereas rural demand shows mix trend.

7. Retail inflation forecast also retained at 6.7% for the financial year 2022-23.

8. The July-September CPI is seen at 7.1% compared to 7.4% previously, while October-December CPI is seen at 6.4% against 6.2% projected earlier. The January-March CPI projection is retained at 5.8%. The April-June FY24 CPI is seen at 5%.

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9. India witnessed large portfolio outflows of USD 13.3 billion in FY23 up to August 3.

10. Financial sector is well capitalized and sound.

11. India’s foreign exchange reserves provide insurance against global spillovers.

12. Monetary Policy Committee decides to remain focused on the withdrawal of accommodative stance to control inflation.

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13. “Depreciation of rupee is due to strength of the dollar, rather than any weakness in India’s macro fundamentals. Remain focused on maintaining the stability of the rupee,” said Das.

14. RBI will remain watchful and focused on maintaining the stability of the rupee.

15. Rupee depreciated by 4.7% against the US dollar this financial year till August 4.

16. Despite the resultant drawdown, India’s foreign exchange reserves remain the fourth largest globally.

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17. Mechanism to be activated to allow NRIs to use Bharat Bill Payment System for payments of utility and education on behalf of their families in India.

18. Next meeting of the Monetary Policy Committee (MPC) is scheduled for September 28-30, 2022.