The Reserve Bak of India (RBI) raised the policy repo rate by 50 basis points (bsp) to 5.9 per cent in its monetary policy review. This is the fourth hike in repo rate in the current financial year. In its Monetary Policy Committee meeting (MPC), the RBI decided to withdraw accodative stance while supporting growth

The standing deposit facility (SDF) was adjusted to 5.6 per cent, MSF and Bank rate to 6.15 per cent.

RBI Governor Shaktikanta Das said in his address that the move to increase the rates was in tandem with the global cues and done to contain the headline inflation in the country

In the current financial year, the RBI has raised the repo rate by 190 bps. In August, the RBI MPC increased the repo rate by 50 bps to 5.4 per cent from 4.9 per cent in June.

Earlier in August, RBI retained its Consumer Price Index (CPI)-based inflation forecast of 6.7 per cent for the current financial year, with risks evenly balanced. The CPI forecast assumes the average price of crude oil for the Indian basket at $105 per barrel.

CPI inflation is seen at 7.1 per cent in July-September, 6.4 per cent in October-December and 5.8 per cent in January-March. The price gauge is seen at 5 per cent in the first quarter of 2023-24.

The MPC retained the real GDP growth forecast of 7.2 per cent for the current financial year. GDP growth for the first quarter of the next financial year is seen at 6.7 per cent. India’s economy grew by 13.5% in the April-June period this fiscal — the fastest in the last four quarters — on account of better performance by the agriculture and services sectors.