RBI hikes repo rate by 35 bps to 6.25%, cuts GDP forecast to 6.8%
AMN / WEB DESK
The Reserve Bank of India today announced a 35-basis-point increase in the repo rate to 6.25 per cent. The RBI Monetary Policy Committee (MPC) voted to raise the rate to bring elevated inflation back towards its target of 4 per cent, governor Shaktikanta Das said.
The six-member MPC, which held its bi-monthly policy meeting from December 5 to 7, remained focused on withdrawing accommodation.
Summary of MPC Announcements made by Governor Shaktikanta Das
- RBI MPC increases repo rate by 35 basis points to 6.25 percent
- MPC voted to remain focused on withdrawal of accommodation
- Inflation expected to be above 4 percent in the next 12 months
- GDP growth forecast for FY23 lowered to 6.8 percent from 7 percent
- CPI inflation forecast for FY23 retained at 6.7 percent
The MPC’s rate action was not unanimous, with 5 out of 6 members voting for the rate hike. The decision on the stance was also not unanimous, with 4 out of six members voting for the retention of the stance.
The Standing Deposit Facility rate – which represents the floor of the interest rate corridor, is now 35 bps higher at 6 per cent. The Marginal Standing Facility rate, which is the upper band of the interest rate corridor, has also been increased by 35 bps to 6.50 per cent.