RBI hikes repo rate by 50 bps to pacify inflation, third consecutive hike

Mumbai: To control inflation, the Reserve Bank of India (RBI) on Friday raised the benchmark lending rate by 50 basis points to 5.40 per cent.

With the latest hike, the repo rate or the short-term lending rate at which banks borrow, has crossed the pre-pandemic level of 5.15 per cent.

This is the third consecutive increase after an increase of 40 basis points in May and 50 basis points in June. RBI has hiked the benchmark rate by 1.40 per cent since May this year.

All six members of the Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted in favor of the rate hike.

Consumer price index (CPI)-based inflation, which the RBI factors into while setting its benchmark rate, stood at 7.01 per cent in June. Retail inflation has been running above the RBI’s comfort level of 6 per cent since January this year.

Inflation based on the Wholesale Price Index (WPI) remained in double digits for 15 consecutive months. The WPI reading in June stood at 15.18 per cent.

The RBI’s latest action comes after the Bank of England raised the rate by 50 basis points, the biggest increase in 27 years, to 1.75 per cent.

Last month, the US Federal Reserve raised interest rates by 0.75 per cent for the second time in a row, taking its benchmark rate to a range of 2.25-2.5 per cent. -PTI

This report is automatically generated from PTI news service. ThePrint assumes no responsibility for its contents.

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