RBI raises repo rate by 50 basis points to 5.9%; announces withdrawal of accommodative stance!!Shaktikanta Das, the governor of the RBI, revealed on Friday that the Monetary Policy Committee has decided to raise the repo rate by 50 basis points to 5.9%. Additionally, RBI changed its monetary policy’s accommodative stance and reduced its FY23 GDP projection from 7.2% to 7%. It anticipates that inflation would continue high in FY23, at 6.7%. Check details here.
The six-member Monetary Policy Committee decided to raise the repo rate by an additional 50 basis points, bringing the total policy rate to 5.9%, RBI Governor Shaktikanta Das announced on Friday.For the third time in a row, the central bank increased the rate at which it loans to commercial banks, increasing the rate by 190 basis points over the course of the last five MPC sessions, from 4% in April 2022 to 5.9% as of September 2022’s conclusion.
The accommodating posture of monetary policy was also dropped by the RBI due to the system’s excess liquidity. Due to a liquidity shortfall and to spur growth, the central bank switched to an accommodating policy in June 2019.In his speech today, Governor Das stated that the RBI would continue to concentrate on the withdrawal of accommodations.
Additionally, the central bank reduced its estimate of GDP growth for the fiscal year 2022–2023 (FY23) from 7.2% to 7%. The RBI projects real GDP growth of 6.3% from July through September and 4.6% from October through December.
Das emphasised that the Indian economy is still solid and that it continues to have the highest real GDP growth rate among developed nations. The Consumer Price Index (CPI)-based inflation prediction for FY23 has been held at 6.7% by the RBI, and it is anticipated that prices will remain high in the second half of the year at 6%.Although the RBI believes that consumer price tapering would continue, it issued a warning that threats to food inflation could have a negative effect on pricing expectations. Vegetable prices have begun to be impacted by the delayed monsoons, and pressure on grain prices has expanded from wheat, according to the central banker.
Das also said that if the recent drop in global commodity prices holds, it might lessen the pressure on pricing in the months to come. Inflation is currently at or near 7%, and we anticipate it to stay high at or around 6% in the second half of the year. Follow our site for daily updates regarding this.
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