MPC increases reporate by 50 basis points FY23 inflation estimate to 6.7%
The Reserve Bank of India’s
Monetary Policy Committee
(MPC) on Wednesday voted
unanimously to raise the re
po rate by 50 basis points to
4.90% in a bid to slow inflfla
tion which it estimates will
average 7.5% in the current
April-June quarter.
The RBI’s move will in
crease borrowing costs
across the board, from those
seeking loans to buy cars
and homes, to MSME fifirms
looking to raise capital.
The MPC also decided to
remain focused on the with
drawal of accommodation
which had been provided to
support the COVID-19 hit
economy, to ensure that in-
flflation remains within the
target going forward, while
supporting growth, RBI Go
vernor Shaktikanta Das said
announcing the decision.
“Inflflation has steeply in
creased much beyond the
upper tolerance level. A
large part of the rise in inflfla
tion is primarily attributed
to a series of supply shocks
linked to the war [in Uk
raine]. In these circumstanc
es, we have started a gradual
and orderly withdrawal of
extraordinary accommoda
tion instituted during the
pandemic,” he explained.
Based on the assumption
of a normal monsoon in
2022, and average crude oil
price (Indian basket) of $105
per barrel, retail inflflation
was now projected at 6.7% in
2022-23, with Q1 at 7.5%; Q2
at 7.4%; Q3 at 6.2%; and Q4 at
5.8%, with risks evenly ba
lanced, the RBI said.
About 75% of the increase
in inflflation projections could
be attributed to the food
group, Mr. Das said, observ
ing that “the recent spike in
tomato prices” were adding
to food inflflation.
Growth forecast
The MPC retained its fore
cast for real GDP growth for
2022-23 at 7.2%. Output
would expand by 16.2% in
Q1, by 6.2% in Q2, 4.1% in Q3
and 4.0% in Q4, the RBI said.
“Further rate hikes re
main clearly on the table,
with
Bimal Mardi is a Professional Content Writer. He works in First Santal Broadcast Network TV/ News channel in India. Bimal Mardi writes about Technology, Education and Tech Product Reviews
