RBI Monetary Policy Highlights: Rbi Hikes Repo Rate by 50 bps; Will Take 6-8 Months for Full Impact, Guv Das Says

Read more

The RBI rate-setting committee was unanimous in its decision on lifting the rates as the current inflation remains above RBI’s comfort zone. The Reserve Bank’s rate-setting panel – Monetary Policy Committee – started the meeting on August 3 for three days to deliberate on the prevailing economic situation.

Bank rates and Marginal Standing Facility (MSF) rates were adjusted to 5.65 per cent, and 5.15 per cent, respectively. RBI left the CRR untouched. Cash Reserve Ratio (CRR) is the deposit that banks are mandated to maintain by the RBI as reserves in the form of liquid cash.

The RBI Governor Shaktikanta Das, in its policy speech, said that the successive shocks to the global economy are taking a toll. IMF has also revised the global growth projection downwards as the Indian economy continues to grapple with high inflation.

Das noted that $13.3 billion has been the outflow from India in the current financial year so far. India is expected to be amongst the fastest growing economy in the world, he said, while adding that the current account deficit will remain within comfortable limits.

The RBI retained the FY23 GDP growth forecast at 7.2 per cent with Q1 (April-June) GDP growth forecast at 16.2 per cent, Q2 (July-September) GDP growth forecast at 6.2 per cent, Q3 (October-December) GDP growth forecast at 4.1 per cent and Q4 (January-March ’23) GDP growth forecast at 4 per cent.

Retail inflation or the CPI inflation forecast for FY23 has also remained unchanged at 6.7 per cent, with April-June inflation forecast at 7.5 per cent, July-September forecast at 7.4 per cent, October-December at 6.2 per cent and January-March 2023 inflation forecast at 5.8 per cent.

Das said that CPI is above comfortable levels. He added that the MPC is stressed that sustained high inflation could destabalise inflation expectations. Further, he said that volatility in global markets is leading to imported inflation.

The next meeting of the MPC is scheduled for October 2022.

Read the Latest News and Breaking News here