RBI hikes repo rate by 35 points to 6.25%

Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent. 

RBI hikes repo rate by 35 points to 6.25%
Governor Shaktikanta Das

New Delhi: India's Central Bank, Reserve Bank of India on Wednesday 7 announced the increase in policy repo rate by 35 basis points to 6.25 per cent, with immediate effect. This is the fifth consecutive time that RBI increases the repo rate.

The Monetary Policy Committee (MPC) met on the 5th, 6th and 7th of December 2022. Based on an assessment of the macroeconomic situation and its outlook, the MPC decided by a majority of 5 members out of 6 to increase the policy repo rate by 35 basis points to 6.25 per cent, with immediate effect.

Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent. 

The MPC also decided by a majority of 4 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.

The Governor of RBI, Shaktikanta states, "In the beginning of this year (2022), just as the COVID-19 pandemic was receding, the war in Ukraine overwhelmed the world in a black swan moment and fundamentally altered the global economic outlook. Surges in food and energy prices and shortages in key staples have severely affected the poorer sections across the world. Though international food, energy and other commodity prices have eased moderately in recent times, inflation remains high and broad-based. 

The IMF has projected that more than one-third of the global economy will contract this year or next year. While no country is spared the ill-effects of such large shocks, emerging market economies (EMEs), especially the ones dependent on food, energy and commodity imports, have been the worst affected."

MPC was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects. These actions will strengthen the medium-term growth prospects of the Indian economy. Accordingly, the MPC decided to increase the policy repo rate by 35 basis points to 6.25 per cent and to remain focused on withdrawal of accommodation, while supporting growth.

Read Also : SAIL DSP and EMD signs agreement with Sentra World