The Reserve Bank of India’s (RBI’s) six-member monetary policy committee (MPC), headed by Governor Shaktikanta Das, on Wednesday announced to hike the repo rate by 50 basis points (bps).
This hike is a two-year high of 4.9 per cent as it doubled down to tame inflation that has soared in the past couple of months.
The central bank has also raised its inflation forecast for FY23 by 100 basis points to 6.7 per cent, with the quarterly projections predicting the MPC will fail to meet its mandate.
Here you can check the full statement of RBI Governor Shaktikanta Das.
According to the latest forecasts released on Wednesday, the RBI sees Consumer Price Index (CPI) inflation averaging 7.5 per cent in April-June, 7.4 per cent in July-September, 6.2 per cent in October-December, and 5.8 per cent in the first quarter of 2023.
However, in April, the RBI had pegged CPI inflation at 6.3 per cent for April-June, 5.8 per cent for July-September, 5.4 per cent for October-December, and 5.1 per cent for January-March 2023. The latest forecasts assume a price of $105 a barrel for India's crude oil basket.
The higher inflation forecasts come on the back of a surge in retail inflation to a near eight-year high of 7.79 per cent in April.
The MPC has also raised housing loan limits for co-operative banks by 100 per cent, while it has raised limit of e-mandates to Rs 15,000 from Rs 5,000.
The bi-monthly MPC meeting, which began on Monday, ended with the announcement of the MPC’s decisions regarding key interest rates, CRR, and policy amendments to be made by the RBI governor.
The post-policy news conference will be telecast at 12 pm on Wednesday.