RBI raises repo rate to 4.9%; expects inflation to hurt for 3 quarters

Inflation forecast increased to 6.7% for FY23; GDP forecast retained at 7.2%

After a surprise rate hike in May in an off-cycle meeting, the six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Wednesday unanimously voted to increase the benchmark policy rate by 50 basis points thereby taking the repo rate to 4.90 per cent.

Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65 per cent and the marginal standing facility (MSF) rate and the bank rate to 5.15 per cent. The MPC also voted unanimously to remain focused on the withdrawal of accommodation to ensure that inflation remains within range going forward, while supporting growth.

While the