RBI likely to hike repo rate today. What you need to know
Premium- RBI Governor Das is expected to raise rate again after a surprise hike last month
The Reserve Bank of India (RBI) will be announcing the outcome of its June policy meeting today and Governor Shaktikanta Das is widely expected to increase the repo rate again to contain soaring inflation, after an off-cycle hike last month.
The six-member Monetary Policy Committee headed by the RBI Governor Shaktikanta Das started deliberations on the bi-monthly policy review on Monday.
In a surprise move last month, RBI raised the repo rate by 40 basis points to 4.4% in an off-cycle hike, its first increase in borrowing rates since August 2018, to contain inflation.
Inflation above the 6% upper range prompted the central bank to raise rates in a surprise meet. India's retail inflation accelerated to an eight-year high in April, remaining above the central bank's tolerance limit for a fourth month in a row, and is likely to stay elevated.
The central bank is also expected to raise its inflation projection for the current fiscal year to above 6%, given the recent increase in inflationary pressure. The RBI raised its inflation forecast for the current financial year to 5.7% in April, up from 4.5% in February.
RBI Governor Shaktikanta Das stated in a recent interview that rate hikes in June were a "no-brainer." While a rate hike is unavoidable, as Das stated in June, the question is by how much.
RBI had slashed the repo rate in March 27, 2020 with an aim to cushion the impact of covid-induced lockdown, and maintained status-quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022.