In an unexpected move, the RBI Governor on Wednesday announced a hike in repo rate by 40 basis points to 4.4% with immediate effect.
This is RBI’s first increase in borrowing rate since August 2018. The announcement came hours before the US Federal is expected to undertake it’s a largest rate hike in two decades.
RBI Governor Shaktikanta Das announced that during the off-cycle meeting held between May 2-4 to assess the global situation, MPC voted unanimously to increase the policy rate in view of persistent inflationary pressures in the economy. Das said that geopolitical tensions and crude oil prices are forcing inflation higher in major economies.
Noting that shortages and volatility in commodity and financial markets are becoming more acute, Das said, “We have deployed both conventional and unconventional tools to support growth.”
The SDF rate now stands at 4.15% and MSF at 4.65%.
