New Delhi: The Reserve Bank of India (RBI) has increased the policy rate repo by 0.5 percent to 5.4 percent to curb retail inflation and improve the value of the rupee. This will increase the monthly installment of loans as well as make it expensive to borrow from banks.
This is the third time in a row that the policy rate has been increased in the fourth monetary policy review of the current financial year.
Overall, the repo rate has been increased by 1.4 per cent so far in 2022-23. With this, the key policy rate has reached pre-pandemic levels. The Monetary Policy Committee has also decided to focus on withdrawing the soft policy stance. In addition to the increase in the repo rate, the Fixed Deposit Facility (SDF) rate has been increased from 4.65 percent to 5.15 percent and the Medium Standing Facility (MSF) rate has been increased from 5.15 percent to 5.65 percent.
Reserve Bank Governor Shaktikanta Das said that the Indian economy is struggling with inflation and it is necessary to bring it under control. He said that the committee has also decided to focus on bringing inflation under target control in the coming time as well as withdrawing the negative policy stance with the intention of supporting economic growth.
He said the decision is in line with the target of supporting economic growth as well as keeping the Consumer Price Index (CPI) based inflation in the range of 2-6 per cent. Mr. Das said that with the advance of southwest monsoon, sowing of kharif crops has gained momentum. He also expressed hope that prices of edible oils would come down.