Bhoomika Singh
The Reserve Bank of India (RBI) on Friday hiked the repo rate by 50 basis points to 5.90 per cent to control the rising inflation, keeping in line with the aggressive policies of central banks and the volatile markets prevalent across economies. RBI Governor Shaktikanta Das announced the monetary policy rate hike on October 30, 2022.
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). The rates for the standing deposit facility (SDF) and the marginal standing facility (MGF) were also raised by 50 basis points to 5.65 per cent and 6.15 per cent, respectively.
Reacting to the big breaking, the Managing Director of Gera Developments, Rohit Gera said, ” While inflation is a concern and this issue needs to be addressed, the decision to hike rates ought to have been deferred – raising interest rates at a time of uncertainty at the global level adds to concerns of a slow down in the economy. Interest rates are a sensitive issue for home buyers as rising interest rates negatively impact affordability.”
Weighing in, K V Srinivasan, Executive Director & CEO, Profectus Capital, expressed, “RBI increasing the rate is in line with the global trend to combat inflation arising from the pandemic and the geopolitical situation. While most countries are also facing falling growth rates, India has remained an exception with GDP growth projected at 7 per cent.”
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“While the cost of CAPEX is likely to increase, I don’t believe this will impede the CAPEX cycle as Indian industry especially MSMEs has the capacity to absorb this, he signs off.
The central bank had already hiked the key policy rate by 140 bps since May to 5.4 per cent to cool off domestic retail inflation that has stayed above the RBI’s upper tolerance limit of 6 per cent each month this year. The MPC is responsible for fixing the benchmark interest rate in India. In the committee, three members are from RBI and three members are from outside.
