RBI interest rate: The Reserve Bank of India, on Wednesday, announced to hike the interest rate by 25 BPS to 6.5%, citing sluggish core inflation. The hike in the repo rate is also set to further increase home, car loans and EMIs.
The RBI has increased interest rates six times since May 2022, for a total increase of 250 basis points.
RBI Governor Shaktikanta Das, who also announced the bi-monthly monetary policy, said that the Monetary Policy Committee (MPC) unanimously resolved to hike the policy repo rate by 25 basis points and keep a "strong surveillance" on the inflation outlook.
Inflation to remain above 4% level in next fiscal: RBI
Stating that core inflation will remain sticky, Das said the policy rate at 6.5% still lags behind the pre-pandemic level. He went on to say that the inflation will decrease in the next fiscal but remain above the 4% level. Notably, the RBI is required to maintain inflation at 4% with a 2% cushion on either side.
"Unprecedented events of the last three years have put to test monetary policy across the world. Emerging market economies are facing sharp tradeoffs between supporting economic activity and controlling inflation while preserving policy credibility," Das said.
ALSO READ: RBI commences Monetary Policy Committee meeting amid expectations of lower rate hike
Global economic outlook not very bleak: RBI
Meanwhile, the RBI governor also said that the global economic outlook does not look as grim as it was a few months ago. According to him, the growth prospects in major economies improved while inflation is on a descent.
"The Real GDP growth for 2023-24 is projected at 6.4% with Q1 at 7.8%, Q2 at 6.2%, Q3 at 6% & Q4 at 5.8%. The Indian economy remains resilient," the RBI governor added. In the latest Economic Survey of the finance ministry, the growth projection was 6-6.8% for 2023-24.
(With inputs from agencies)
