0.50% rate hike is the ‘new normal’ around the world, says RBI governor

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Shaktikanta Das reacted to the decision of the RBI Monetary Policy Committee to raise the policy repo rate

Bombay (Maharashtra):

Reserve Bank of India (RBI) governor Shaktikanta Das said Friday that a 50 basis point or 0.50 percent hike in key interest rates has become a new norm for central banks around the world.

Das responded to the decision of the RBI Monetary Policy Committee (MPC) to raise the policy repo rate by 0.50 percent.

“If you look around, 50 basis points has become the new norm and a large number of central banks are now going up by 75 to 100 basis points,” Das said, explaining the rationale behind the 50 basis point hike in key interest rates by the government. RBI. .

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The governor of the RBI said the other central banks have been much more aggressive than the RBI in raising key rates.

“There is a trend that 75 to 100 bps will take over 50 basis points. But in RBI, we have a very calibrated and measured view. We consider the impact of the rate action on the growth aspect and on our urban and rural consumers. of that we made a balanced decision based on the prevailing and expected inflation growth dynamics,” said Mr. Das.

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The Monetary Policy Committee, meeting Aug. 3-5, unanimously decided to raise the policy repo rate by 50 basis points to 5.4 percent, effective immediately.

As a result, the interest rate on the permanent deposit facility (SDF) is adjusted to 5.15 percent; and the marginal standing facility (MSF) rate and the bank rate up to 5.65 percent. The MPC has also decided to continue to focus on housing withdrawals to ensure inflation stays within target in the future while supporting growth.

These decisions are in line with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a +/- 2 percent range, while supporting growth, as outlined in the Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC).

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“We, in the RBI, reiterate our commitment to maintain price and financial stability to put our economy on a sustainable growth path. Our actions have helped the economy overcome a series of shocks over the past two and a half years. have taken over our role at this critical juncture and will continue our efforts to ensure a safe and soft landing,” the RBI governor said after the MPC meeting.

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