RBI Monetary Policy: The Monetary Policy Committee (MPC) has decided to increase the repo rate by half a percentage point by one vote. RBI Governor said that due to Russia-Ukraine war, inflation has increased worldwide
RBI Monetary Policy: The Reserve Bank has increased the repo rate for the second consecutive month. It has increased the repo rate by 0.50%. At present the repo rate was 4.40% which has now become 4.90%. In the meeting of the Monetary Policy Committee (MPC) of RBI, it was decided to increase the repo rate by half a percent.
All six members of the MPC voted in favor of the proposal to increase the repo rate by half a percentage point. At 10 am on Wednesday, RBI Governor Shaktikanta Das explained in detail about the hike in the repo rate. He said that retail inflation is the biggest challenge right now. He said that due to the Russo-Ukraine war, inflation has increased around the world.
Das said that the supply chain is getting affected due to Ukraine Crisis. However, despite the infection and war of coronavirus, the economy continues to grow. RBI Governor further said that inflation has now become a big problem for the world. He also announced changes in the Accommodative Stance of RBI’s monetary policy. This means that the era of soft monetary policy is now over.
Important decisions taken today in the Monetary Policy Committee
- The Monetary Policy Committee has increased the repo rate by 0.50% to 4.90%.
- Standing Deposit Facility (SDF) also increased by 0.50%. Now it has increased to 4.65%.
- Marginal Standing Facility (MSF) has also increased by half a percentage point and now it has increased to 5.15%.
- To control inflation, the Monetary Policy Committee decided to increase the repo rate by one vote.
No change in GDP growth rate estimates
The Monetary Policy Committee (MPC) of the Reserve Bank has not changed the growth rate forecast for the fiscal year 2023. It has retained its growth forecast of 7.2% for Fiscal Year 2023.
- GDP growth in the first quarter (April-June) is estimated at 16.2%.
- GDP growth in the second quarter (July-September) is estimated at 6.2%.
- GDP growth in the third quarter (April-June) is estimated at 4.1%.
- GDP growth in the fourth quarter (January-March 2023) is estimated at 4.0%.
- Retail inflation is projected to be 6.7% in the current fiscal.
The burden of inflation is increasing continuously
While deciding to increase the repo rate, RBI Governor Shaktikanta Das said that the Russo-Ukraine war has led to a rise in commodity prices. Global trade has been affected due to the worsening situation in Europe. Due to this, pressure is also being seen on the currency of emerging countries.
Due to rising commodity prices, inflation is increasing all over the world, India is also no exception to this. Inflation is expected to be more than 6 percent till Oct-Dec. The RBI governor says that the inflation situation is more than expected.
Retail inflation is expected to be 7.5 per cent in Q1 of FY23 while retail inflation in Q2 of FY23 is expected to be at 7.4 per cent. On the other hand, retail inflation in Q3 of FY23 is expected to remain at 6.2 per cent, while in Q4 of FY23, retail inflation is expected to remain at 5.8 per cent.
In estimating 6.7 percent retail inflation for this financial year, RBI has assumed that the average price of crude oil will be $105 per barrel. Also, monsoon will be normal. This means that there will be good rains in the coming 3-4 months. Due to this, the production of crops will be good.
We have taken all measures to ensure that the information provided in this article and on our social media platform is credible, verified and sourced from other Big media Houses. For any feedback or complaint, reach out to us at businessleaguein@gmail.com
