Reserve Bank of India has also raised the key interest rate, the second increase in five weeks, to rein in rise in prices that it saw continuing to hurt consumers in the near term. With inflation persistently hovering above the upper tolerance limit of 6 per cent, the RBI raised the lending rate of the repurchase (repo) rate by 50 basis points to 4.90 per cent. The increase follows a 40 bps rise in early May at an unscheduled meeting that kicked off the tightening cycle.
The Monetary Policy Committee raised its inflation forecast for the current fiscal (April 2022 to March 2023) to 6.7 per cent from April prediction of 5.7 per cent but retained its economic growth projection at 7.2 per cent. "Inflation has steeply increased beyond the upper tolerance level. Food, energy and commodity prices remain elevated. Inflation will likely remain above RBI's upper tolerance band until December," Governor Shaktikanta Das said, adding that 75 per cent of the increase in inflation forecast is on account of a spike in food prices which are due to war in Ukraine.
This story is from the June 2022 edition of Indian Economy & Market.
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This story is from the June 2022 edition of Indian Economy & Market.
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