The decision follows a meeting of the Monetary Policy Committee, where all six members voted unanimously in favor of a rate hike
The decision follows a meeting of the Monetary Policy Committee, where all six members voted unanimously in favor of a rate hike
The Reserve Bank of India (RBI) raised the benchmark interest rate by 40 basis points (bps) to 4.40% on May 4 in a bid to stem inflation, which has been stubbornly above the 6% target range for the past three months.
The decision follows an unscheduled Monetary Policy Committee (MPC) meeting where all six members voted unanimously to hike rates while maintaining an accommodative stance.
While inflation has been above the 6% target since January, RBI Governor Shakkanta Das said April inflation data is also likely to be high. Retail inflation for March was 6.9%. The RBI has implemented its first rate hike since August 2018.
The governor said the MPC’s decision reversed the May 2020 rate cut by an equal amount. The central bank last revised its benchmark or short-term lending rate on May 22, 2020 in an off-policy cycle to stimulate demand by cutting the interest rate to an all-time low of 4%.
