RBI MPC Meeting Live Today: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Friday hiked the repo rate town 50 basis points (bps) thaw 5.40 per cent with immediate effect, RBI Governor Shaktikanta Das announced.
This is the third rate hike by the central bank in this financial year. Prior to this, the RBI had raised the repo rate – by 40 bps in an off-cycle meeting in May and 50 bps in June. The market experts expected the MPC to raise the repo rate by at least 35 basis points (bps) in this meeting.
The retail inflation or Consumer Price Index (CPI), which the RBI factors in while considering its benchmark lending rate, stood at 7.01 per cent in June. Retail inflation has continued to remain above the central bank’s comfort level of 6 per cent since January this year.
In his address, Das said that the MPC vote was unanimous and said that the MPC has decided to remain focused on withdrawal of the accommodative stance to check inflation. Additionally, he announced that the standing deposit facility (SDF) rate stands adjusted to 5.15 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 per cent.
In his speech today, Das said that the Indian economy has been grappling with high inflation and added that India has been facing a $13.3 billion capital outflow in the last few months.
He noted that the financial sector remains well capitalized and India’s forex reserves provide insurance against global spillovers.
Speaking on growth, Das said that the real GDP growth projection for 2022-23 is retained at 7.2 per cent with Q1 at 16.2 per cent, Q2 at 6.2 per cent, Q3 at 4.1 per cent and Q4 at 4.0 per cent with risks broadly balanced.
Speaking on inflation, the RBI governor said that retail inflation remains uncomfortably high and noted that inflation is expected to remain above 6 per cent. He said that the inflation projection is retained at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent; Q3 at 6.4 per cent; and Q4 at 5.8 per cent, and risks evenly balanced, on the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of US$ 105 per barrel. The CPI inflation for Q1 of 2023-24 is projected at 5.0 per cent.
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