Voting To Hike Repo Rates
In an emergency meeting, all the members of the Monetary Policy Committee (MPC) voted unanimously to raise the repo rate, said RBI Governor Shaktikanta Das in an unplanned press briefing held today.
With immediate effect, the repo rate have been hiked by 40 bps to 4.40 per cent. The latest standing deposit facility rate stands at 4.15 per cent, on the other hand, the marginal standing facility rate and bank rate stand at 4.65 per cent. CRR or Cash Reserve Ratio is also increased by 50 basis points to 4.5 per cent effective from May 21.
Rate Hiked First Time Since 2018
The Reserve Bank of India has increased the repo rate for a long time since August 1, 2018.
Mr Das said, “The MPC also decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.”
Monetary Policy Committee has organised the unplanned meeting on May 2 & May 4 to reanalyse the inflation growth rate and its effects since the last organised meeting of the department was held on April 6-8.
“The situation is dynamic and fast-changing and our actions have to be tailored accordingly.” Mr Das pointed out.
Governor said that the items prone to inflation which are essential for India are like edible oils are short because of conflict in Europe export ban by producers.
He stated, “The jump in fertiliser prices and other input costs has a direct impact on food prices in India.”
He added, “Nine out of the 12 food subgroups registered an increase in inflation in the month of March. High-frequency price indicators for April indicate the persistence of food price pressures.”
“Interest rate hike has been aimed at strengthening, consolidating medium-term economic growth prospects. Policy decisions taken today have been aimed at containing inflation spikes & re-anchoring inflation expectations.” asserted Mr Das.
The Governor said RBI will ensure liquidity in the system, “RBI will ensure that there will be adequate liquidity in the system to meet the productive requirements of the economy in support of credit offtake growth.”