Guwahati: The Reserve Bank of India (RBI) increased the repo rate by 50 basis points to 5.90% on Friday in an effort to contain the growing inflation in keeping with the aggressive monetary policies of other central banks and the turbulent markets that are present across economies.
The rate increase was announced by RBI Governor Shaktikanta Das on Friday. In the meeting of the Monetary Policy Committee (MPC) that started on Wednesday, five of the members of the MPC voted to hike the key lending rate, repo rate, by 50-basis points (bps).
A 50 basis point increase was also made to the rates for the standing deposit facility (SDF) and the marginal standing facility (MGF), bringing them to 5.65 percent and 6.15 percent, respectively.
The RBI’s upper tolerance ceiling of 6% has been consistently exceeded by domestic retail inflation this year, prompting the central bank to increase the key policy rate by 140 basis points since May to 5.4 percent.
The benchmark interest rate in India must be set by the MPC. Three committee members are within RBI and the remaining three come from outside.