Lagatar24 Desk
New Delhi, Sept 30: The Reserve Bank of India (RBI) increased the repo rate by 50 basis points (BPS) to 5.9% with immediate effect on Friday, marking the fourth consecutive increase.
On September 28, the six-member Monetary Policy Committee (MPC) convened its three-day meeting to discuss the state of the economy. The interest rate at which the central bank loans to commercial banks is known as the repo rate.
The RBI has raised rates four times thus far this fiscal year. In August, the RBI raised the repo rate by 50 basis points (bsp) to 5.4 percent as part of its off-cycle monetary policy review.
The policy repo rate was raised by the RBI earlier in May by 40 basis points, or 0.40 percent, to 4.40 percent. The rate was then raised by another 50 basis points by the RBI in June, bringing it to 4.90 percent. Since May of this year, the central bank has increased the benchmark rate by a total of 1.90 percent.
Inflation measured by the Consumer Price Index (CPI), which the RBI takes into account when determining its benchmark rate, was 7% in August. Since January of this year, retail inflation has been running above the RBI’s comfortable range of 6%.
While cutting the real GDP growth estimate from the previous forecast of 7.2 percent for FY’23 to 7 percent, RBI governor Shaktikanta Das kept the inflation outlook for the current fiscal year at 6.7%.
The latest RBI move comes after the US Federal Reserve raised interest rates for the third time in a row, by 0.75 percentage points, earlier this month, bringing its benchmark rate to a range of 3–3.25%.
