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Reserve Bank to rise off-cycle rate as result of Global storms hitting: Report

Reserve Bank to rise off-cycle rate as result of Global storms hitting: Report

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According to the minutes of the rate-setting panel released on Wednesday, several global storms hitting at the same time prompted the Reserve Bank to raise the key interest rate in an off-cycle review.

As per report,  RBI Governor Shaktikanta Das stated that the off-cycle monetary policy actions were aimed at lowering inflation and anchoring inflation expectations in order to strengthen the economy's medium-term growth prospects and protect the purchasing power of the poor.

The MPC recommended raising the key interest rate (repo) by 40 basis points following its meetings on May 2 and 4. The rate was increased immediately. It was my first hike since August of last year.

"Because several storms have hit at the same time, our monetary policy response should be seen as a critical step in regaining control of the ship. Evidence from India and around the world clearly shows that persistently high inflation harms savings, investment, competitiveness, and growth "According to the minutes, the governor stated.

At the meeting, RBI Deputy Governor and MPC member Michael Debabrata Patra said that in this environment, a measured approach and a level head are required.

"Recent incoming data suggest that, barring imported food and fuel inflation, India's macro-fundamentals are still intact and in sync with the recovery that has tenaciously made its way through waves of the pandemic," he said.

The repo rate, or short-term lending rate, was raised by 40 basis points to 4.4 percent by all six members of the panel.

Edited By: Admin
Published On: May 19, 2022