RBI Monetary Policy Meet highlights: The Monetary policy committee (MPC) of the Reserve Bank of India (RBI) announced its policy review today. The bi-monthly meeting which started on Monday is keenly watched by the financial market.
Governor Shaktikanta Das, delivering the Monetary Policy Committee (MPC) announcements, also said the FY23 real GDP forecast had been lowered to 6.8% - 0.1% lower than revised estimates released Tuesday by the World Bank. In addition, the RBI has also maintained FY23 consumer price index (CPI) inflation forecast at 6.7% and Das said he expects inflation to moderate as the winter harvest comes in.
RBI MPC Meet highlights: The Reserve Bank of India (RBI) on Wednesday hiked the policy repo rate - for a fifth consecutive time - by 35 basis points to 6.25%. The key interest rate has been hiked a total of 190 basis points - by 50 basis points thrice since June and once - by 40 basis points - during an off-cycle meet in May. The central bank increased the rate after inflation continues to stay above its tolerance band.
The RBI chief hailed the Indian economy's performance in the face of global challenges like the war in Ukraine and the Covid-19 pandemic and underlined that it is the fastest growing in Asia this year.
The RBI has been extremely judicious in their decision to raise repo rate by 35 bps as against the previous revisions, which were much sharper. The move is a balanced approach towards continued economic growth despite the higher than tolerance level of inflation, says Shishir Baijal, Chairman & Managing Director, Knight Frank India.
He adds, since the rate hike cycle in May 2022, home loan products have become expensive by around 150 bps before today’s hike. The lending rates have risen significantly, especially for the loans linked to External Benchmark based Lending Rate (EBLR) where there has been a 100% transmission of repo rate. Loan products linked to MCLR rate are also up by around 108 bps during this period.
The 35-bps rate hike by the RBI may be considered moderate in the current context and therefore considered a welcome move,
