TaxationTax Saving

RBI Monetary Policy Repo Rate Update Sep2022

RBI Monetary Policy Repo Rate Update Sep2022

The RBI has hiked the repo rate by 50 basis points to 5.90%, the fourth straight increase in the current cycle, to tame sustained above-target retail inflation rate. This is the fourth interest rate hike in a row by the RBI in an attempt to control inflation.

The RBI had slashed the repo rate in March, 2020 with an aim to cushion the impact of covid-induced lockdown, and maintained status-quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022. The RBI has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May.

Also Check-TDS on Cash Withdrawal U/S 194N: Everything You Need to Know

More Hikes in Repo Rate in Future?

The RBI is expected to raise interest rates further in the next fiscal year, which will impact businesses with higher levels of debt and lead to lower profitability. However, the overall macroeconomic situation in India is positive, with a broad-based economic recovery underway, normal monsoon rains forecasted, and strong growth in manufacturing and credit. The only key worry at the moment is the surging current account deficit.

The Main Highlights from The RBI Monetary Policy Meeting Are as Follows:

  • RBI Governor Shaktikanta Das announced that the monetary policy committee (MPC) hiked the repo rate by 50 bps to 5.90 per cent.
  • Das added that inflation is expected to remain elevated at around 6 per cent in second half of 2022-23.
  • The central bank also cut growth forecast for the current financial year to 7 per cent.

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) hiked the repo rate by 50 basis points (bps) to 5.90 per cent on Friday, RBI Governor Shaktikanta Das announced.

This is the fourth rate hike by the central bank in this financial year. Prior to this, the RBI had raised the repo rate by 40 bps in an off-cycle meeting in May and 50 bps in June and August. The market experts expected the MPC to raise the repo rate by 50 basis points (bps) in this meeting to tame the raging inflation and a falling rupee which hit an all-time low earlier this week following a strengthening of the dollar.

The retail inflation rate in August was 7.00 per cent, which is higher than the RBI’s preferred inflation rate of 6 per cent. The RBI governor announced that the standing deposit facility (SDF) rate stands adjusted to 5.65 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.15 per cent. He said that the MPC decided by a majority of 5 out of 6 members to remain focused on the withdrawal of accommodation to ensure that inflation remains within target going forward.

RBI Governor Shaktikanta Das announced In his speech given on 30th September 2022, That the world is currently experiencing a third major shock from aggressive monetary tightening by central banks. He explained that there is nervousness in the financial market and the global economy is on the brink of a new storm. He noted that the Indian economy continues to be resilient in the midst of global turmoil.

Commenting on inflation, Das said that the inflation trajectory remains uncertain due to continuing geopolitical tensions and nervous global financial market sentiments. “Today, inflation is hovering around 7 percent and we expect it to remain elevated at around 6 percent in the second half of 2022-23,” he said.

Speaking about GDP, Das said that while real GDP growth in Q1 was lower than expected, the late recovery in kharif sowing, the comfortable reservoir levels, improvement in capacity utilization, and the government’s continued focus on capital expenditure are expected to support growth in the coming quarters.

Related Articles

Leave a Reply

Back to top button


Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

%d bloggers like this:

Adblock Detected

Adblocker Detected Please Disable Adblocker to View This PAGE