RBI raises repo rate by 50 bps, sees inflation over tolerance level till Q3FY23

Reserve Bank of India (RBI) raised the interest rate by 50 basis points to a two-year high of 4.9 per cent as it doubled down to tame inflation that has surged in the last couple of months

RBI chief Shaktikanta Das
RBI chief Shaktikanta Das
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NH Web Desk

Reserve Bank of India (RBI) on Wednesday raised the interest rate by 50 basis points to a two-year high of 4.9 per cent as it doubled down to tame inflation that has surged in the last couple of months.

The rate hike comes on the back of a 40 bps increase effected by RBI at an unscheduled meeting on May 4.


All the six members of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted for the latest rate hike.

India's retail inflation accelerated to 7.79 per cent in April, remaining above the tolerance limit of the central bank RBI for a fourth month in a row. It is highly likely that the retail inflation will remain above 6 per cent for another few months.

Das on Wednesday categorically said India's retail inflation is likely to stay above the tolerance level till third quarter of FY23 before moderating below 6 per cent.

For FY23, RBI sees overall inflation at 6.7 per cent, with 7.5 per cent in Q1, 7.4 per cent in Q2, 6.2 per cent in Q3, and 5.8 per cent in Q4, taking into consideration the normal monsoon and average crude oil basket price of $105 per barrel.

Notably, wholesale inflation in the country has been in double digit for over a year now.

Coming to growth, India's real GDP growth in FY23 is seen at 7.2 per cent, will be 16.2 per cent in Q1, 6.2 per cent in Q2, 4.1 in Q3, and 4.0 in Q4, with risks broadly balanced, Das said.

(with agency inputs)

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    Published: 08 Jun 2022, 10:42 AM