On Wednesday, the Reserve Bank of India (RBI) hiked the repo rate by 35 basis points (bps) to 6.25 per cent. RBI governor Shaktikanta Das said that Monetary Policy Committee (MPC) voted 5-1 to raise the rates. RBI also lowered its GDP growth forecast for FY23 to 6.8 per cent from 7 per cent earlier.

The MPC voted 4-2 to remain focused on withdrawing accommodation so that inflation remains within the target while supporting growth.

Das further said that inflation in India would stay above 4 per cent for the next 12 months.

“MPC was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects…,” Das said.

The central bank had last raised the key benchmark rate by 50 basis points on September 30. With this, the repo rate has been raised by 225 bps since April 2022.

In its last policy statement on September 30, the RBI’s MPC projected GDP growth for the FY23 at 7 per cent and retail inflation at 6.7 per cent.