RBI Monetary Policy Committee Meeting – Highlights
The MPC has lowered the GDP forecast and increased the repo rate by 50 basis points.
- The Reserve Bank of India (RBI) has increased the repo rate by 50 basis points to 5.90 per cent, which is a three-year high.
- This makes funding expensive for existing and new borrowers. For existing borrowers, all home, car, personal and education loans on floating rates will become costly.
- It will also cause huge burden on household expenses due to rise in prices of almost goods and services.
- The spike in repo rate is a consequence of high inflation, Ukraine crisis, aggressive global central bank policies and crisis in financial markets caused by macroeconomic uncertainties.
- This is the fourth consecutive rate hike after a 40 basis points increase in May and 50 bps increase each in June and August.
- The central bank has increased the benchmark rate by 1.90 per cent since May to bring down domestic retail inflation, which is staying above the tolerance limit of 6 per cent each month.
- The rates for the standing deposit facility and the marginal standing facility have also been hiked by 50 basis points to 5.65 per cent and 6.15 per cent respectively.
- The growth of India’s gross domestic product or GDP in April-June was among the highest in the world.
- However, the Monetary Policy Committee forecasts a decline in the real GDP growth for the current year from the earlier prediction of 7.2 per cent to 7 per cent.
- The GDP growth in July-September is estimated to be at 6.3 per cent and for October-December it is estimated to reach 4.6 per cent.
- The GDP growth in January-March is forecasted to be at 4.6 per cent and for the first quarter of the next financial year, it is expected to be at 7.2 per cent.
Category: Economy & Banking Current Affairs - 2022
Topics: Indian Economy • Monetary Policy • Monetary Policy Commitee • Monetary Policy Committee • Monetary Policy Committee (MPC) • Monetary policy of India • RBI monetary policy • Reserve Bank of India • Reserve Bank of India (RBI) • Trends in Indian Economy
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