RBI raises repo rate by 50 bps to 4.90%, second hike in 2 months
RBI Governor Das said, "Inflation has accelerated well beyond the tolerance limit. The recovery process in emerging market countries is also being hampered."
FollowRBI Governor Shaktikanta Das announced on Wednesday that the Monetary Policy Committee (MPC) agreed to raise the repo rate by 50 basis points to 4.90 per cent at its meeting from June 6 to June 8. As a result, Das increased the Standing Deposit Facility (SDF) to 4.65 percent and the Marginal Standing Facility (MSF) and bank rate to 5.15 per cent.
He said the MPC voted unanimously to remain focused on withdrawal of accommodation to ensure inflation remains within target going forward. Das further said, "Inflation has accelerated well beyond the tolerance limit. The recovery process in emerging market countries is also being hampered. However, the Indian economy has shown to be robust. We have begun to gradually withdraw the excessive accomodation. The RBI will remain aggressive and resolute in reducing the effects of the geopolitical situation on our economy. Our movements will be measured and calibrated."
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Meanwhile, the RBI has retained the GDP growth projections. He said, "GDP growth for the current year has been retained at 7.2%. RBI believes Q1 will see GDP grow at 16.2% while Q2 GDP growth is expected to be at 6.2%, Q3 is seen at 4.1% and Q4 GDP numbers are expected to be at 4%."
Additionally, inflation is projected at 6.7% for the current fiscal year. RBI Governor said that Q1 inflation is expected to be at 7.5% while 7.4% in Q2. In Q3 inflation is seen at 6.2% before falling to 5.8% in Q4. 75% of the increase in inflation is attributed to the food group.
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