RBI hikes lending rate by 50 basis points to 4.9%
New Delhi, Jun 08: The Reserve Bank of India has hiked lending rate by 50 basis points to 4.9 per cent. The Monetary Policy Council (MPC) vote unanimously and decided to keep stance withdrawal from accomodative.
We are facing new challenges with every passing day due to the war. War in Europe is lingering, challenges accentuating supply chains. Recovery is gaining momentun despite the pandemic and war.
On the other hand inflation has become global, RBI Governor Shaktikanta Das said.
The MPC voted unanimously to remain focused on the withdrawal of accommodation to ensure inflation remains within target going forward. The standing deposit facility and marginal standing facility rates were also raised by 50 basis points. The standing deposit facility rate is now at 4.65 per cent and the marginal standing facility rate at 5.15 per cent.
Das said that the war in Ukraine has led to globalisation of of inflation. The war is turning out to be a dampener on global trade and growth. Domestic economic activity is gaining traction while inflation pressures have intensified faster, he said. The inflationary pressures have become broad based and remain largely driven by supply shocks. The repo rate remains below its pre-pandemic level and inflation is likely to remain near upper tolerance of 6 per cent for the first three quarters of this year.
Sustained high inflation could unhinge inflation expectations, Das added.
The Indian economy remains resilient and the RBI will remain supportive to growth, he also added. Our steps will be calibrated, focused on bringing down inflation to the target level, the RBI government further added.
He also said that the information for April-May suggests that the domestic economic recovery is firm.
Urban demand is recovering, rural demanding is also improving. Surveys show capacity utilisation in manufacturing sector increased to 74.5 per cent in January-March.