Time for measured RBI monetary policy moves: What prompted the rate hike

The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) on Friday hiked the policy repo rate by 50 basis points to 5.4 per cent — a three-year high —owing to inflation concern and to shield the exchange rate, which has come under pressure since war broke out in Europe in February.

The MPC maintained its hawkish stance, raising the rate to a three-year high, a move that stumped the bond market, while also terming the inflation level ‘unsustainable’ and ‘unacceptable’.