Shaktikanta Das was reacting on RBI Monetary Policy Committee decision to hike the policy repo rate
Mumbai (Maharashtra):
The Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said 50 basis points or 0.50 per cent hike in policy rates has become a new normal for the central banks across the world.
Mr Das was reacting on the RBI Monetary Policy Committee (MPC) decision to hike the policy repo rate by 0.50 per cent.
“If you look all around, 50 basis points has become the new normal and large number of central banks are now hiking by 75 to 100 basis points,” Mr Das said while explaining the rationale behind 50 basis points hike in policy rates by the RBI.
RBI Governor said the other central banks have been far more aggressive than the RBI in hiking policy rates.
“There is a tendency that 75 to 100 bps will takeover 50 basis points. But in RBI, we take a very calibrated and measured view. We factor in the impact of the rate action on the aspect of growth and on our consumer urban and rural demand. Based on that we have taken a balanced call. Based on the prevailing and expected inflation-growth dynamics,” Mr Das said.
The Monetary Policy Committee that met during 3-5 August unanimously decided to increase the policy repo rate by 50 basis points to 5.4 per cent, with immediate effect.
Consequently, the standing deposit facility (SDF) rate stands adjusted to 5.15 per cent; and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 per cent. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of /- 2 per cent, while supporting growth, as per the Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC).
“We, in the RBI, reiterate our commitment to maintain price and financial stability to place our economy on a sustainable path of growth. Our actions have helped the economy to tide over a series of shocks in the last two and half years. We are seized of our role at this critical juncture and will persevere in our efforts to ensure a safe and soft landing,” RBI Governor said after the conclusion of the MPC meeting.
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