RBI MPC Meeting: Repo rate increased by 35 bps to 6.25 per cent, lowers GDP growth projection to 6.8 per cent
Reported By:| Edited By: DNA Web Team |Source: DNA Web Desk |Updated: Dec 07, 2022, 11:15 AM IST
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday hiked the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, RBI Governor Shaktikanta Das announced. The RBI policy rate is now at its highest level since August 2018. This is the fifth rate hike by the RBI in FY 2022-23. Earlier, the RBI had raised the repo rate by 40 bps in May and 50 bps in June, August and September.
The repo rate hike was expected in this meeting in the central bank’s bid to tame the raging inflation which has continued to remain above the 6 per cent mark for the tenth straight month this October.
The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das decided by majority view in favour of the rate hike.
The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 6.7 per cent in October. Retail inflation has been ruling above the RBI’s comfort level of 6 per cent since January this year. Das retained the inflation projection at 6.7 per cent for the current fiscal.
Das further announced that the RBI’s GDP growth forecast for the current financial year (FY23) is seen at 6.8 per cent. The growth has been reduced from RBI’s previous estimate of 7 per cent.
In its last bi-monthly policy review released in September, the RBI had slashed the economic growth projection for the current financial year to 7 per cent from 7.2 per cent earlier on account of extended geopolitical tensions and aggressive monetary policy tightening globally.
However, despite the downward revision in the economic growth projection, India will remain among the fastest growing major economies in the world, said RBI Governor Shaktikanta Das while announcing the latest bi-monthly monetary policy. He said the Indian economy remains resilient and is a bright spot in a gloomy world.
It is to be noted that the RBI had also pared its growth projection in September as well. The World Bank on Tuesday revised upwards its GDP growth forecast for India to 6.9 per cent for 2022-23 from its earlier estimate of 6.5 per cent, saying the economy was showing higher resilience to global shocks.