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RBI raises repo rate to fight high inflation

Mumbai: Reserve Bank of India Governor Shaktikanta Das announced today that the repo rate, the main lending rate, will be raised by 50 bps to 5.9%. Explaining the rationale behind the policy, the governor said the bleak global outlook, persistent inflation at alarming levels and aggressive policies in advanced economies were the reasons for the rate hike.

At the three-day meeting of the Monetary Policy Committee (MPC) that ended on Friday, five of the MPC’s members voted to raise the repo rate by 50 basis points (bps), the governor said.

Commenting on the sharp downward pressure on emerging market currencies, the governor said: and sharp currency depreciation. ”

Interest rates on the Standing Deposit Facility (SDF) and the Marginal Standing Facility (MGF) were also increased by 50 basis points to 5.65% and 6.15% respectively.

Regarding RBI’s stance, he said: Headline CPI inflation has hovered around 3% and was expected to range from 3.4% to 3.7% in the second half of 2019-20 (late 2019-20)…”

The central bank has raised its key policy rate by 140 bps to 5.4% since May in a bid to curb domestic retail inflation, which has been hovering above the RBI’s 6% monthly upper bound this year.

Regarding India’s growth, Shaktikanta Das said: This was driven by solid growth in consumer spending and investment demand. ”

He also said that after two and a half years of living with Covid-19, he will be free to celebrate the next three festivals, with a sustained resurgence in urban demand and a gradual increase in rural demand. Stated.

MPC is responsible for determining benchmark interest rates for India. On the committee he has 3 members from the RBI and from outside he has 3 members.

https://www.siasat.com/rbi-hikes-repo-rate-to-fight-high-inflation-2424517/ RBI raises repo rate to fight high inflation

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