- RBI retains FY23 inflation projection at 6.7 pc
Mumbai, August 5: The monetary policy committee of the Reserve Bank of India has raised the repo rate by 50 basis points to 5.40 per cent in order to contain the persistently high inflation.
Raising interest typically suppress demand in the economy, thereby helping inflation to decline.
The three-day monetary policy committee meeting commenced on Wednesday.
Today’s hike takes the repo rate above pre-pandemic levels of 5.15 per cent.
In line with the global trend of monetary policy tightening to cool off inflation, the RBI has so far hiked the key repo rates — the rate at which the central bank of a country lends money to commercial banks — by 140 basis points.
Meanwhile The RBI on Friday retained its retail inflation forecast for current fiscal year at 6.7 per cent amid geopolitical developments and higher global commodity prices, hoping inflationary pressures to ease further.
In its previous monetary policy review in June, it had projected retail inflation for 2022-23 at 6.7 per cent, up from 5.7 per cent forecast in April.
The RBI raised the benchmark lending repo rate by 50 basis points to 5.40 per cent.
RBI Governor Shaktikanta Das said inflation in second and third quarter of the ongoing fiscal year is expected to remain above the upper tolerance level of 6 per cent.
The central bank aims to keep retail inflation in a band of 2-6 per cent.