RBI Rate Hike in Repo Rate
The repo rate has been hiked by 40 bps to 4.40% by RBI with immediate effect. The standing deposit facility rate is currently at 4.15% and the marginal standing facility rate and the discount rate are at 4.65%. The tally conjointly hiked the Cash Reserve Ratio (CRR) by 50 basis points to 4.5% effectively. The withdrawal of liquidity because of this hike would be to the order of around Rs 87,000 crore, as Governor Das has said.
The MPC (Monetary Policy Committee) commands a meeting on 2nd and 4th May to value the evolving inflation-growth dynamics and therefore the impact of the developments when the MPC meeting on 6th & 8th April 2022.
“The state of affairs is dynamic and fast-changing and our actions have to be compelled to be tailored accordingly,” Mr. Das said.
“Monetary policy still remains accommodative; approach is to target careful & label withdrawal of accommodation”, Mr. Das said.
Outlook on Inflation:
Laying down the explanation behind the off-cycle rate hike, the Governor said that inflation-sensitive things related to our nation, like edible oils, face shortages thanks to the conflict in Europe and export ban by key producers.
“The jump in plant food costs and different input prices includes a direct impact on food costs in our nation,” he said.
The sharp acceleration in headline CPI inflation in March 2022 to 7% was propelled above all by food inflation, the Governor said.
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