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RBI hikes Repo Rate by 50 bps to 5.4%

On conclusion of its three-day bimonthly review meeting of RBI’s annual monetary policy, the Monetary Policy Committee (MPC) headed by RBI governor, Dr Shaktikanta Das, hiked Repo Rate by by 50 bps to 5.40 per cent. Repo rate is now back to pre-pandemic levels, highest since August, 2019.

RBI hikes Repo Rate by 50 bps to 5.4%
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RBI hikes Repo Rate by 50 bps to 5.4%

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Mumbai, Aug 05 On conclusion of its three-day bimonthly review meeting of RBI's annual monetary policy, the Monetary Policy Committee (MPC) headed by RBI governor, Dr Shaktikanta Das, hiked Repo Rate by by 50 bps to 5.40 per cent. Repo rate is now back to pre-pandemic levels, highest since August, 2019.

While SDF rate has been adjusted to 5.15 per cent, MSF is now at 5.65 per cent.

Addressing post MPC meet, the RBI governor said, "MPC noted domestic economic activity resilient. MPC to remain focussed on withdrawal of accommodation."

Das hinted that further calibrated withdrawal of accommodation warranted and said that MPC stance to ensure inflation remains within target.

Talking about the Indian economy, the RBI governor said that Indian economy naturally impacted by global situation. However, he was quick to add that against global headwinds, domestic economic activity was resilient.

He hoped that current account deficit (CAD) is expected to be in sustainable limits.

India economy grappling with problem of high inflation, he said, adding that rural demand indicator shows mixed signals.

Still, he left a positive note by saying that southwest monsoon, reservoirs level were above normal.

He cautioned that inflation is expected to remain above tolerance threshold as sustained high inflation can harm growth in medium term.

Sustained high CPI could destabilise expectations. CPI eased from surge in April but remained uncomfortably high. Core inflation remains at elevated levels.

Das rued over the fact that financial markets have remained uneasy despite intervention. This year has witnessed large portfolio outflows of $13.3 billion.

Kumud Das
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