In the 3rd consecutive rate hike the BI today raised the benchmark lending rate by 50 basis points to 5.40% to tame inflation. With this, the repo rate or the short-term lending rate at which banks borrow has crossed the pre-pandemic level of 5.15%.
This is the third consecutive rate hike after a 40 basis points in May and 50 basis points increase in June. In all, the RBI has raised benchmark rate by 1.40 per cent since May this year. All six members of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted for the rate hike.
Unveiling the fourth monetary policy for the current fiscal, RBI Governor Shaktikanta Das said the central bank remains committed to price stability to put the country on the sustained path of growth.
The RBI expects growth in the first quarter of the current fiscal at 16.2 per cent, which will taper to 4 per cent by the fourth quarter.
Das, however, cautioned that there are risks from the ongoing Russia-Ukraine war.
The central bank in April slashed the GDP growth projection for 2022-23 to 7.2 per cent from its earlier forecast of 7.8 per cent.
The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 7.01 per cent in June. Retail inflation has been ruling above the RBI's comfort level of 6 per cent since January this year. Inflation based on the Wholesale Price Index (WPI) remained in double-digit for 15 months in a row. The WPI reading was at 15.18 per cent in June.