Mumbai : The Reserve Bank of India (RBI) has once again raised Repo Rate by 50 basis points to 4.90 points. Consequently, the standing deposit facility – the SDF rate – stands adjusted to 4.65% and the marginal standing facility – MSF rate and bank rate – to 5.15%.
“On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (June 8, 2022) decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points to 4.90 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.15 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. These decisions are in consonance with the objective of achieving the mediumterm target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth” announced RBI Governor shaktikanta Das.
Inflation is likely to remain above MPC’s upper tolerance band through first three quarters of FY23. Sustained high inflation could unhinge inflation expectations and trigger second round effects, he said.
He added that, with the assumption of a normal monsoon in 2022 and average crude oil price in the Indian basket of 105 dollars a barrel, inflation is now projected at 6.7% in 2022-23.
According to the provisional estimates released by the National Statistical Office on May 31st, India’s GDP growth in FY22 is estimated at 8.7%. This level of real GDP in 2021-22 has exceeded the pre-pandemic, i.e., 2019-20 level.