RBI raises repo rate by 50 bps to tame prices; pegs FY23 GDP growth at 7.2%

The repo rate before the pandemic came was 5.15%

The six-member Monetary Policy Committee of the Reserve Bank of India (RBI) on Wednesday unanimously decided to increase the policy repo rate by 50 basis points (bps) to 4.9 per cent while raising the inflation forecast by 100 bps to 6.7 per cent for this fiscal year, giving rise to expectations of further monetary tightening in the coming months.

The second hike in the repo rate in a month will lead to an increase in lending rates, causing borrowers to feel the pinch of higher equated monthly instalments. The RBI kept its growth forecast unchanged at 7.2 per cent for FY23.

RBI