RBI raises repo rate by 50 bps to 5.4%; withdraws accommodative stance


On Friday, the six-member Monetary Policy Committee of the Reserve Bank of India (RBI) decided to hike the repo rate by 50 basis points to 5.4%.

The bi-monthly meeting of the RBI MPC started on Wednesday, and RBI Governor Shaktikanta Das on Friday announced that the MPC unanimously decided to hike the policy rate.

This is RBI's third rate hike in the current financial year. In its off-cycle monetary policy review in May, the RBI hiked the policy repo rate by 40 basis points or 0.40 per cent to 4.40 per cent. Then in June, the RBI further raised the rate to 4.90 per cent, a 50 basis points increase.

The repo rate is the interest rate at which the central bank lends funds to banks.

According to a BS poll, the MPC was expected to raise the repo rate by 35-50 bps from the current 4.9 per cent, taking the policy rate to pre-pandemic levels. The Repo rate was 5.15 per cent (February 2020) before the RBI started cutting interest rates to fight the economic slump amid the Covid-19 havoc.


www.business-standard.com dt. 05.08.2022