On Wednesday, the Reserve Bank of India (RBI) Governor Shaktikanta Das broadcasted a repo rate hike of 25 basis points (bps), taking the critical standard interest rate to 6.5%. The MPC’s verdict was split 4-2, the first rate hike in 2023. The Governor also said that the MPC has focused on withdrawing the “accommodative stance” after witnessing the situation. The MPC met on February 6, and the meeting clinched on February 8.

Das said that even after unstable global developments, the Indian economy relics resilient. However, the weak global demand and the current economic environment would strain domestic growth. The central bank will uphold a “strong vigil” on the financial state.

Besides, a rise in GDP progress forecast for FY23 from 6.8% to 7%. For FY24, the growth rate was pegged at 6.4%. In the Economic Survey of the finance ministry, the growth prognosis was 6-6.8% for 2023-24.

RBI Governor said that the “world economy does not look so grim now”, and the inflation has been decreasing. In Q4, retail inflation is predicted to average 5.7%. But the core inflation relics are “sticky”. For FY23, the inflation projection is kept at 6.5%. For FY24, the inflation has been nailed at 5.3%.

He added that even though inflation will be restrained in the next fiscal, it will remain above the 4% level. The RBI is delegated to keep inflation at 4% with a margin of 2% on either side.

Das added that the scheduling of the government securities market was reinstated to the pre-pandemic level of 9 am to 5 pm. The RBI will now license lending and deriving of G-secs.

The RBI monetary policy escorts the bank and advances rates in the economy. If the repo rate has trekked, it is generally shadowed by a rise in credit and loan interest rates. The same pattern is surveyed when the repo rate is abridged.