RBI hikes repo rate by 40 basis points to 4.40 per cent
RBI Governor Shaktikanta Das on Wednesday announced a revision of the repo rate. The rate has been hiked by 40 basis points to 4.40 per cent.
RBI Governor Shaktikanta Das on Wednesday announced a revision of the repo rate. The key lending rate has been hiked by 40 basis points to 4.40 per cent. This is the first hike in the Repo rate since August 2018.
The RBI governor informed that the Monetary Policy Committee of the central bank had unanimously voted to increase the repo rate by 40 basis points with immediate effect.
Shaktikanta Das, while making a media statement, said that the Indian economy had shown resilience -- thanks to favourable policies -- despite the inflationary pressures.
He further said that the MPC had to ensure both conventional and unconventional tools to support growth considering that shortages and volatility in commodity and financial markets were becoming more acute.
The RBI governor further announced that the Cash Reserve Ration was being hiked by 50 basis points to 4.5 per cent in order to withdraw excess liquidity. The CRR hike, effective from midnight of May 21, will lead to a withdrawal of Rs 87,000 crore.
Das said that there was a sharp acceleration in CPI inflation in March 2022 at 7 per cent, which was driven especially by food inflation.
Out of the 12 food sub-groups, nine had witnessed an increase in inflation in March, Das noted, adding that the persistence of food price pressures was observed from the high-frequency price indicators for April.
As the war between Russia-Ukraine draws on and global sanctions on Russia intensify, persistent inflation is becoming more acute, Das said.
Despite the prevailing global scenario, the RBI governor informed that the country's foreign exchange reserves remained high at over $600 billion and that the country was maintaining a low debt-to-GDP ratio.