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RBI Policy: Repo rate hiked by 25 bps to 6.5% as inflation eases

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Batori24 Bureau
Batori24 Bureau
Batori24 is a Vernacular based Assamese news portal based in Guwahati Assam. We are a dedicated news channel covering news and stories across the globe with special reference to Assam, north-east along with National and International news.

RBI Policy: Shaktikanta Das, governor of the Reserve Bank of India (RBI), announced a repo rate hike of 25 basis points (bps) on Wednesday, raising the key benchmark interest rate to 6.5 percent. The MPC decision was 4-2 split. This will be the first rate increase in 2023. Prior to this, the repo rate was raised by 35 basis points on December 7.

Das also announced that the MPC has decided to withdraw the accommodative stance as the “situation does not look so grim now”. The MPC met on February 6, and it ended on February 8.

 

Das stated that the Indian economy remains resilient in the face of volatile global developments. However, the current economic environment and weak global demand would be a drag on domestic growth. The central bank will keep a “vigilant eye” on the economic situation.

Das also increased the GDP growth forecast for FY23 from 6.8 percent to 7%. The growth rate for FY24 has been set at 6.4%.

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The RBI Governor stated that the “world economy does not look so grim now,” and that inflation is decreasing. Retail inflation is expected to average 5.7% in the fourth quarter. However, core inflation remains “sticky”. Inflation is expected to remain at 6.5 percent in FY23. Inflation is expected to be 5.3% in fiscal year 24.

Previously, a Business Standard poll predicted a 25 basis point rate increase.

The RBI’s monetary policy directs the economy’s banks and lending rates. When the repo rate is raised, deposit and loan interest rates typically rise in tandem. When the repo rate is reduced, the same pattern emerges.

Shaktikanta Das went on to say that the MPC has decided to maintain its ‘withdrawal of accommodation’ stance in order to keep inflation within the target while also supporting growth.

Governor Das also stated that the Standing Deposit Facility (SDF) rate will be reduced to 6.25 percent and the Marginal Standing Facility (MSF) rate will be reduced to 6.75 percent.

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