The Monetary Policy Committee (MCO) met for three days to think upon the current economic situation in India. RBI Governor, Shaktikanta Das said that the MPC had decided to focus on withdrawal of accommodation to keep inflation within target while supporting growth.
The RBI has hiked the repo rate by 50 basis points to 5.4% with immediate effect, crossing pre-pandemic level of 5.15%.
This is RBI’s third hike in the current financial year. In May, it hiked the policy repo rate by 40 basis points or 0.40% to 4.40 % and in June, it increased it to 4.90%.
The real GDP growth projection for 2022-23 is kept at 7.2% with Q1-16.2%, Q2-6.2%, Q3-4.1% and Q4-4% with risks balanced.
The government and central bank are taking steps to contain inflation which is above the RBI comfort level of 6% since January this year.
Finance Minister, Nirmala Sitharaman said that the government and the RBI are taking every possible step to ensure that the inflation is kept in the band of 7 or below 6%.