RBI Raises Repo Rate By 40 Basis Points, First Since May 2020

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New Delhi: The Reserve Bank of India (RBI) has decided to raise the repo rate by 40 basis points to 4.40%, said governor Shaktikanta Das on Wednesday.

The decision was taken by the monetary policy committee (MPC) of the central bank in its off-cycle meeting held between May 2-4, said das.

He said the decision was taken in view of rising inflation, geo-political tensions, high crude oil prices and shortage of commodities globally, which have impacted Indian economy.

Repo rate refers to the rate at which commercial banks borrow money by selling their securities to the central bank, while reverse repo rate is the rate at which the central bank borrows money.

These rates are key to boost credit and investments by businesses in the economy, as India’s pushes its nascent economic recovery. The Monetary Policy Committee’s (MPC) review of the economy is key to markets and general business sentiment.

“Shortages and volatility in commodities and financial markets are becoming more acute,” Das said in his address from Mumbai.

“We have demonstrated in the MPC that we are not bound by a set book of rules but be accommodative of changing scenarios,” he said.

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