RBI hikes repo rate to rein in inflation, lowers GDP forecast

Rbi Monetary Policy : Making it to the fourth consecutive rate hike, the Reserve Bank of India raised the benchmark lending rate by 50 basis points to 5.90 per cent in a bid to tame inflation.

With the latest hike, the repo rate or the short term lending rate at which banks borrow from the central bank is now close to 6 per cent.In all, RBI has raised benchmark rate by 1.90 per cent since May this year.

The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das decided in favour of the rate hike.The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 7 per cent in August. Retail inflation has been ruling above the RBI's comfort level of 6 per cent since January this year.

Das retained the inflation projection at 6.7 per cent for the current fiscal while slashing real GDP growth estimate to 7 per cent from earlier forecast of 7.2 per cent for FY'23.