RBI Hikes Repo Rate by 25 Bps, Retains Accommodation Withdrawal Stance

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RBI Hikes Repo Rate by 25 Bps, Retains Accommodation Withdrawal Stance
Credit: © Reuters.

By Malvika Gurung

Investing.com -- The Monetary Policy Committee (MPC) of RBI has hiked the repo rate by 25 basis points to 6.5% on Feb 8, 2023, marking the sixth consecutive rise in the interest rate, following a three-day policy meeting that commenced on Feb 6.

The central bank’s benchmark rate-setting panel has raised the key lending rate in line with Investing.com’s forecast of a 25 bps rate hike.

Read Also: RBI MPC Time, Investing.com Forecast: Street’s Outlook As Inflation Moderates

The monetary policy committee has continued to retain its ‘Withdrawal of Accommodation’ stance in a 4:2 vote, to bring down high inflation, especially the core inflation. RBI Governor Shaktikanta Das has said that the monetary policy committee will keep a ‘strong vigil' on the outlook of inflation.

"Policy rate at 6.5% still trails the pre-pandemic level. Opportune moment to reflect on the evolution of monetary policy. Unprecedented events of the last few years have put monetary policy to test,” said Das.

Since May 2022, RBI MPC has hiked the benchmark interest rate six times to a size of 250 basis points.

India’s retail inflation declined sharply to a year-low of 5.72% on an annual basis in December 2022, the second straight month when the figure remained under RBI’s mandated tolerance band of 2-6%.

Indian equity benchmark indices Nifty50 and Sensex rose up to 0.5% following the RBI’s policy outcome.

Read Also: India CPI Eases in Dec: 5.72% vs 5.9% Forecast, Under RBI’s Target Range

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