The repo rate has been increased by 40 basis points.
Finance Minister Nirmala Sitharaman said that she is not surprised by the decision taken by the Reserve Bank to increase the repo rate. However, the decision to increase it in the middle of the meeting of the two Monetary Policy Committee was shocking.
Reserve Bank of India (Reserve Bank of India) recently called an emergency meeting of the Monetary Policy Committee and decided to increase the repo rate by 40 basis points. The statement of the government has also come on the decision taken by RBI. Finance Minister speaking at an event Nirmala Sitharaman ,Nirmala Sitharaman) said that the government and I are not surprised by the decision of the Reserve Bank. However, I am definitely surprised about the timing. In the monetary policy meeting in April, Governor Das did not make any changes in the interest rate. The next meeting of the MPC is to be held in June. However, the central bank took this decision midway.
Speaking at the event organized by the Economic Times, Nirmala Sitharaman said that taking loans will become expensive due to increasing the repo rate. However, this will not affect the spending plans of the government in any way. Sitharaman said that central banks around the world are increasing the interest rate. In this regard, the Reserve Bank has also decided to increase the interest rate.
Repo rate hiked to 4.4%
An emergency meeting of the Reserve Bank Monetary Policy Committee was held on 4 May. After this meeting, the repo rate was increased from 4 per cent to 4.4 per cent. Apart from this, the cash reserve ratio was increased from 4 per cent to 4.5 per cent. , It is believed that with the help of this, the Reserve Bank will reduce the liquidity of 87 thousand crores, which will strengthen the rupee. It has reached an all-time high against the dollar. The repo rate has been increased for the first time since August 2018.
Inflation expected to be 7.7 percent in April
Inflation is skyrocketing. For the last three months, the inflation rate has been crossing the upper limit of 6 percent continuously. Inflation reached 6.9 percent in March, which is the highest level of 17 months. The retail inflation rate for the month of April has been estimated at 7.7 percent.
The government is surprised about the time
Sitharaman said that the increase in the repo rate was certain, but it was surprising for the government to take this decision suddenly in the middle of the meeting of two MPCs. Referring to the statement of Reserve Bank Governor Shaktikanta Das, he said that after the MPC meeting in April, Governor Das had said that inflation is a matter of concern. RBI’s focus is now on inflation instead of growth.
Central banks around the world are raising interest rates
Sitharaman said that apart from the Reserve Bank, the American Federal Reserve also increased the interest rate by 50 basis points on that day. Apart from this, Bank of Australia and Bank of England have also increased the interest rate. In this way, banks around the world now work in synchronization. The economy is currently facing both the problem of declining growth rate and rising inflation.