Shaktikanta Das Governor, Reserve Bank of India (File)The Reserve Bank on Wednesday hiked the repo rate by 40 basis points (bps) to 4.40 per cent in a bid to contain inflation, which has remained stubbornly above the target zone of 6 per cent for the last three months.
The decision follows an unscheduled meeting of the Monetary Policy Committee (MPC), with all six members unanimously voting for a rate hike while maintaining the accommodative stance. While the inflation has remained above the targeted 6 per cent since January, RBI Governor Shaktikanta Das said the inflation print in April is also likely to be high.
Next meeting of the MPC is scheduled during June 6-8.
Following are the highlights of what RBI Governor Shaktikanta Das said after the Monetary Policy Committee (MPC) meeting:
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🔴 RBI hikes benchmark interest rate by 40 bps to 4.40% in an unscheduled policy review
🔴Cash reserve ratio hiked by 50 bps to 4.5% effective May 21
🔴 Shortages, volatility in commodities and financial markets becoming more acute
🔴 Geopolitical tension is pushing inflation
🔴 RBI’s MPC decides unanimously to continue with accommodative monetary policy stance while focusing on withdrawal of accommodation to ensure inflation remains within target going forward
🔴 Global commodity price dynamics driving path of food inflation in India
🔴 Inflation expected to rule at elevated levels, warranting resolute and calibrated steps to anchor inflation expectations and contain second round effects
🔴 Interest rate hike aimed at strengthening, consolidating medium-term economic growth prospects
🔴 Renewed lockdowns and supply chain disruptions due to resurgence of Covid-19 in major economies could sustain higher logistics costs for longer
🔴 Foreign exchange reserves remain high at over USD 600 billion and debt-to-GDP ratio is low
🔴 Indian economy appears capable of weathering deterioration in geopolitical conditions
🔴 Jump in fertiliser prices and other input costs have direct impact on food prices in India
🔴 Spillovers from global wheat shortages impacting domestic prices, even though domestic supply remains comfortable
-With PTI inputs
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