The Reserve Bank of India (RBI) in its Monetary Policy Committee (MPC) meeting has further hiked the repo rate – the rate at which banks borrow from the central bank– by 50 basis points to 5.90 per cent with an eye on curbing inflation. This is the fourth straight increase of policy rate by the RBI.
The central bank also reduced India’s GDP growth forecast for the current financial year 7.0 per cent from the earlier projected 7.2 per cent. The second quarter growth is projected at 6.3 per cent while the third quarter at 4.6 per cent and the fourth at 4.6 per cent. India’s GDP growth in the April to June quarter was at 13.5 per cent — the fastest annual expansion in a year.
The RBI has raised rates by a total of 190 basis points since May when it unexpectedly held its first unscheduled meeting.