RBI hikes REPO rate by 50 basis points, bank rate and MSF also spiked to 5.15%

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday hiked the repo rate by 50 basis points (bps) to 4.90 per cent. The move comes barely a month after the central bank in a surprise off-cycle meeting had jacked up the repo rate by 40 basis points to 4.40 per cent to bring down the elevated inflation and tackle the impact of geopolitical tensions. The MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth. MPC retains a GDP growth estimate of 7.2% for the current fiscal.  The Statutory Liquidity Ratio (SLR)  and Cash Reserve Rates (CRR) remains unchanged.

In his speech today, RBI Governor Shaktikanta Das said that the MPC vote was unanimous to hike the Repo rate by 50 BPS. Additionally, he said the standing deposit facility (SDF) rate stands adjusted to 4.65 per cent and the marginal standing facility (MSF) rate, and the Bank Rate to 5.15 per cent from the earlier 4.65 percent. He noted that the repo rate remains below the pre-pandemic level. Retail inflation for FY23 is estimated to be 6.7%, up from 5.7% projected earlier. Around 75% rise in inflation projection can be attributed to rising in food prices, he added.

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (June 8, 2022) decided to modify the key policy rates as under:

Encl: Statement of Regulatory and development policies