08 Jun , 2022 By : monika singh
RBI Monetary Policy LIVE: Reserve Bank of India’s Monetary Policy Committee (MPC) decided to hike the Policy Repo Rate by 50 basis points to 4.9% in its June meeting. RBI Governor Das said that MPC members voted unanimously to hike rates and to continue the withdrawal of the accommodative stance. MPC noted that inflation is likely to remain above the 6% mark for the first three quarters of the current financial year and sees inflation for the fiscal year at 6.7%. Real GDP growth rate for the financial year has been retained at 7.2%. RBI Governor Das said that the war in Europe is lingering and the world is facing new challenges which have accentuated supply chain disruptions. “Indian economy is resilient with strong macroeconomic buffers. Inflation is primarily attributed to supply shocks linked to war,” Shaktikanta Das said.
The MPC also decided to remain focused on the withdrawal of accommodation to ensure,” the MPC statement said. The MPC was earlier focused on accommodation while still remaining accommodative.
With the assumption of a normal monsoon in 2022 and an average crude oil price (Indian basket) of $105 per barrel, inflation is now projected at 6.7 per cent in 2022-23.
Overall system liquidity remains in large surplus, with the average daily absorption under the LAF moderating to Rs 5.5 lakh crore during May 4 – May 31 from Rs 7.4 lakh crore during April 8 – May 3, 2022 in consonance with the policy of gradual withdrawal of accommodation,” said RBI Governor Das.
The 50 bps repo rate hike comes on the back of persistence of elevated inflation and the continued upside risks. Given that inflation is expected to remain above 6% through 3QFY23, RBI had to frontload its actions. We continue to see another 60-85 bps hike in rest of FY23 to manage inflationary expectations,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.
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