News

Published: Feb 9, 2023
Updated: Feb 9, 2023

RBI Increases Repo Rate by 25 Basis Points

Inflation and Rural Demand in Focus

The Reserve Bank of India (RBI) has increased the repo rate by 25 basis points, keeping inflation as its primary concern. Despite a slowdown in the economy, inflation remains sticky, leading the RBI to maintain a strong vigil on its outlook. The rural demand, however, shows signs of improvement, and the RBI projects the FY23 GDP growth at 7%.

MPC Adopts Withdrawal of Accommodation Stance

The Monetary Policy Committee (MPC) has decided to maintain its policy stance at withdrawal of accommodation, reflecting its commitment to managing inflationary pressures. The RBI anticipates that inflation may remain above 4% in FY24, and the real GDP growth for FY24 is estimated at 6.4%.

Core Inflation Remains Elevated

Despite some positive indicators, the core inflation remains elevated, a factor that the RBI is closely monitoring. The increase in the repo rate is in line with the RBI's efforts to keep inflation under control, and the MPC's focus on maintaining price stability.

RBI's efforts directed towards keeping inflation in check

The RBI's decision to increase the repo rate reflects its concern over the elevated levels of inflation, and its commitment to maintaining price stability. The MPC's adoption of the withdrawal of accommodation stance is a testament to its commitment to this goal. While the rural demand shows signs of improvement, the core inflation remains a concern, and the RBI is closely monitoring its impact on the economy.