GDP growth marked down to 7 pc
BBN Bureau
MUMBAI/September 30-2022: The monetary policy committee (MPC) of the Reserve Bank of India (RBI) today (Sept 30) raised the repo rate, or the policy rate, by 50 basis points to 5.90 per cent as widely expected by the market.
“Consequently, the standing deposit facility (SDF) rate is now at 5.65 per cent and the marginal standing facility (MSF) rate at 6.15 per cent”, RBI Governor Shaktikanta Das (Seen in the picture) said.
While SDF is the lower band of the interest rate corridor, MSF marks the ceiling of the interest rate corridor.
The RBI’s gesture proves that India is keen to join its global peers in taking aggressive measures even as inflation has become an all-pervasive menace against the backdrop of a Russia’s war in Ukraine.
190 bps hike in FY23
This is the third time in a row, RBI has raised the repo rate by 50 basis points measure and fourth hike in total since May.
With today’s rate hike, the MPC has hiked the benchmark policy rate by 190 bps in the current financial year.RBI had left repo rate untouched for two years at 4 per cent after the rate cut in May 2020.
RBI said it retained its stance on remaining focused on withdrawal of accommodation.
The stock markets though remained volatile seems to have welcomed the statements made by RBI today on other parameters including its expectation on inflation and GDP growth, etc.
MPC decided to hike the repo rate was by a majority of five out of six. Announcing the hike in repo rate, the RBI governor, Shaktikanta Das, noted that the decision was not only prompted by the urgency to control inflation levels but also due to the adverse action by global central banks, especially that of the advanced countries.
Consumer inflation in India has remained above the RBI’s tolerance target band of 2-6 per cent since January.
In August, consumer price inflation rose to 7 per cent from a five-month low of 6.7 per cent a month ago.
GDP growth
Stating that India’s gross domestic product (GDP) growth in April-June was among the highest in the world, the RBI governor warned that there remain downside risks to economic growth.
The MPC announced a reduction in the real GDP forecast for the current year to 7 per cent from the earlier 7.2 per cent. GDP growth in July-September was seen at 6.3 per cent, whereas that for the October-December quarter has been projected at 4.6 per cent.
