Repo rate hike

Inflation is all across the globe and all central banks are on a run to curb the inflation. The Federal Open Market Committee (FOMC) is scheduled to meet on 2nd November and take further rate hike decisions to bring in control the way too high inflation in the USA. FOMC has been revising the policy rates time and again and it cascades to other central banks to think and revise their key rates.

This time Reserve Bank of India has scheduled its Monetary Policy Committee (MPC) meeting just after a day post FOMC meeting on 3rd November 2022. The MPC must be planning to review key changes that FOMC will announce and it’s impact on Rupee and Indian economy. MPC will also take key decisions if any to change key rate as done before.

All eyes now on FOMC and MPC for key policy rate changes

As anticipated by most, Reserve Bank of India (RBI) on 8th June 2022 has hiked the repo rate by 50 basis points taking it to 4.9%.

India’s Central Bank also announced hike in Marginal Standing Facility (MSF) Rate & Bank Rate from earlier 4.65% to 5.15%.

RBI’s monetary policy committee (MPC) cited higher inflation and higher supply shocks as key reasons behind the repo rate hike. Reserve Bank governor stated that inflation will remain over 6% in the 1st 3 quarters of FY22-23. RBI now estimates India’s inflation during FY22-23 to be at 6.7% from its earlier prediction of 5.7%.

However, the central bank is optimistic on India’s GDP growth and pegs it to be at 7.2%.

Earlier on 5th May 2022 RBI raised the repo rates by 40 basis points. This is the 2nd time the central bank has revised repo rates nearly within a month.

RBI calls for additional meeting of MPC on 3rd November

RBI hikes repo by 50 bps to 4.9% over inflationary concerns