The MPC voted unanimously to increase the policy repo rate by 50 bps to 4.90%. Consequently, the standing deposit facility – the SDF rate – stands adjusted to 4.65% and the marginal standing facility – MSF rate and bank rate – to 5.15%. This was stated by RBI Governor Shaktikanta Das.
Das said that the Indian economy remained resilient and the RBI will remain supportive to growth. He said the war in Ukraine has led to globalisation of inflation.
All the six members of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted for the latest rate hike.
Das said inflation is likely to remain above 6 per cent in first three quarters of current fiscal. The RBI raised inflation forecast to 6.7 per cent for FY23 from an earlier estimate of 5.7 per cent.
“The upside risk to inflation persists; a recent spike in tomato, crude prices fuelling inflation,” Das said. The RBI now permits rural cooperative banks to extend finance to commercial real estate. Urban cooperative banks allowed to provide door-step banking services.
The RBI Governor says overall situation remains challenging, committed to dealing with challenges emanating from overseas. The RBI is focussed on orderly government borrowing programme.
A further cut in VAT by states on motor fuel can further soften inflation. RBI retains its growth projection at 7.2 per cent for current fiscal.