Friday, March 24th, 2023

Repo Rate Hike: Why RBI hiked interest rate despite falling inflation, details of MPC meeting revealed

Photo:FILE RBI Rates

The rate of inflation is coming down since the highest level in April. In the month of July, the rate of inflation decreased further, but despite this, in the first week of the month, the Reserve Bank has shocked the common man by increasing the interest rates. After all, why the RBI governor did not cut interest rates despite the fall in inflation, this has been disclosed after the details of the meeting of the Monetary Policy Committee came to the fore.

The details of the MPC revealed that Reserve Bank of India Governor Shaktikanta Das had proposed a half-percent hike in the repo rate in the meeting, terming inflation as “unacceptably and unsatisfactory”. The details of the meeting of the Monetary Policy Committee (MPC) were released by the Reserve Bank on Friday.

Other members also recommended an increase in the rate

Similar views were expressed by other members of the MPC in the meeting. In the meeting of the MPC held from August 3 to 5, it was decided to increase the key policy rate repo by 0.50 percent to 5.40 percent.

Das’s statement in the meeting

Das had said that the policy measures would strengthen the credibility of monetary policy and reduce inflationary prospects. Based on the inflationary situation and economic activity, we will take appropriate steps with due diligence as per the situation.

Know the opinion of other members

Reserve Bank Deputy Governor Michael Debabrata Patra said that early monetary policy action can contain inflationary pressures and align with inflation targets. This can also reduce the risk of loss in growth in the medium term.

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