Apr 3, 2023 | 2022(December), Blog
The Monetary Policy Committee (MPC) of the Reserve Bank of India increased the policy repo rate by 35 basis points (bps) to 6.25%. The MPC’s majority view was to withdraw accommodative stance, said RBI Governor Shaktikanta Das. Most market experts expected the MPC to raise the repo rate by 35 bps in this meeting to tame the raging inflation which has continued to remain above the 6.00% mark for the 10 straight month in October. The RBI governor further announced that the MPC decided to remain focused on the withdrawal of accommodation and added that the standing deposit facility (SDF) rate stands adjusted to 6.00% and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%. 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, August and September.
The inflation trajectory has largely evolved in line with the outlook given in June 2022. Going forward, food inflation is likely to moderate with the usual winter softening and the likelihood of a bountiful rabi harvest, but pressure points remain in the form of prices of cereals, milk and spices in the near-term. Inflation is expected to be 6.70% this year, with CPI inflation for the first quarter of 2023-24 projected at 5.00% and the second quarter at 5.40% on the assumption of a normal monsoon. “While inflation is moderating, but there is no room for complacency. We have to be watchful nimble in our actions,” he added.
The RBI governor also announced a mild reduction in the GDP growth forecast for the current financial year to 6.80% from 7.00% earlier with the third quarter registering 4.40% growth. Forex reserves stand at $561.2 \illion as on December 2. The Indian rupee has appreciated by 3.20% during April-October in real terms, hile other major currencies have depreciated.