Shaktikanta Das, the governor of the Reserve Bank of India, said that the policy repo rate has hiked by 50 basis points to 5.4% on Friday. At its highest point since 2019, the repo rate has now returned to pre-pandemic levels.
Repo rates, to put it simply, are the fees the Reserve Bank of India levies on commercial banks that borrow from them by offering their securities to the central bank. The benchmark rate has increased by 1.40% since May by central bank.
According to the governor, “Real GDP growth prediction for 2022–23 is maintained at 7.2 percent, with Q1 at 16.2 percent.”
The central bank of the nation has increased the repo rate three times in a row in the past months. According to the governor, India’s economy has been struggling with rising inflation.
Das did, however, add that the country’s financial system still has adequate capital and that the country’s foreign exchange reserves offer protection against “global spillovers.” He continued, “IMF has underlined risk of recession and cut downward economic growth outlook.” The governor of the RBI added that there is a chance that the price of edible oil will drop even more.
Nirmala Sitharaman, the finance minister, stated earlier this week that the administration has been working to keep the inflation rate below 6%. The inflation rate as of right now is 7%.
The finance minister stated that the country’s macroeconomic fundamentals are sound in response to a discussion over price increases in Parliament, adding that “as compared to peer group nations, emerging and advanced economies.”
The RBI has increased interest rates thrice since May.
On Wednesday, the RBI Monetary Policy Committee’s second bimonthly meeting got underway.
With the cost of necessities rising sharply, many countries are setting new records. The outbreak and subsequent war in Ukraine have made things worse.
The rate of inflation in Australia is at its highest point in many years. While Pakistan’s inflation rate experienced its greatest increase in 14 years, South Korea recorded its highest numbers in 24 years.
