Mumbai: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday voted by a majority of 5-1 to raise the policy repo rate by 35 basis points, from 5.90 to 6.25 percent, while four of the six committee members persisted with the monetary policy stance of “withdrawal of accommodation.”
The MPC’s decision comes in the wake of retail inflation continuing above its upper tolerance limit of 6 percent and slowing growth, the media reported.
RBI Governor Shaktikanta Das asserted that market expectations and the decision of MPC remained aligned.
More calibrated monetary policy action is necessary to keep inflation expectations anchored, break core inflation persistence and contain second-round effects, he said.
The central bank also revised the GDP growth projection for FY23 to 6.8 percent (with risks evenly balanced) percent, against 7 percent earlier.
Das said even after the downward revision in GDP growth projection, India will still be among the fastest-growing major economies globally.
They have left the retail inflation projection for FY23 unchanged at 6.7 percent.
“India’s GDP growth remains resilient and inflation is expected to moderate, but the battle against inflation is not over. Pressure points from high and sticky core inflation and exposure of food inflation to international factors and weather-related events remain.”
“While being watchful of the impact of our earlier monetary policy actions, we will keep Arjuna’s eye on the evolving inflation dynamics and be ready to act as may be necessary,” the Governor said.
(VP)