Turning more hawkish on rising inflation and warning of risks from wider fiscal deficit, the Reserve Bank of India (RBI) retained the repurchase or repo rate at 6 per cent and reverse repo rate at 5.75 per cent for the third time in a row on Wednesday. The central bank hiked the inflation projection for the January-March quarter to 5.1 per cent from 4.7 per cent in the third quarter.
The RBI lowered the growth rate to 6.6 per cent from previously projected 6.7 per cent for the current fiscal and projected at 7.2 per cent
for the next fiscal on stabilisation of the GST regime and revival in investment due to credit growth.
There is “need for vigilance around the evolving inflation scenario in the coming months,” RBI said.
Upside risks to inflation include oil prices and the staggered impact of the implementation of HRA by various State Governments.