Highlights of RBI Monetary Policy:
Governor Shaktikanta Das-led Monetary Policy Committee (MPC) on Friday raised the repo rate by 50 basis points (bps) to 5.40 percent in a bid to tame persisting high inflation.
After RBI’s August policy meet decision today, the repo rate is above pre-pandemic levels of 5.15 percent. With this, the overall rate hike in three successive policy meets has now gone to 140 basis points, in line with the global trend of monetary policy tightening to cool off inflation.
Higher interest rates are deemed to suppress demand in the economy, thereby helping to tackle inflation. For India, another bigger worry is the widening trade deficit, owing to higher Brent crude oil prices and a depreciating rupee against the US dollar.
The repo rate remains at below pre-pandemic level, even after the two consecutive hikes. With today’s expected hike, the market is expecting the RBI to take policy rates to at least pre-pandemic levels.
RBI Governor Shaktikanta Das: The real GDP growth projection for 2022-23 is retained at 7.2% with Q1- 16.2%, Q2- 6.2%, Q3 -4.1% and Q4- 4% with risks broadly balanced.
The RBI has retained its FY23 gross domestic product (GDP) growth forecast at 7.2%.
Bharat Bill Payment System will facilitate inward gross payments for non-resident Indian (NRIs) to pay bills in India and also help senior citizens, said Governor Shaktikanta Das Reserve Bank of India (RBI).
Credit info companies will have their own internal ombudsmen system and the central bank will set up a panel to examine MIBOR benchmark, alternatives, said RBI Governor Das.