Repo Rate Hiked By 35 bps To 6.25%; In Line With Expectations

Last Updated: December 07, 2022, 10:10 IST

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This is the fifth consecutive repo rate hike by the RBI this year.

This is the fifth consecutive repo rate hike by the RBI this year.

With this latest hike, the RBI’s rate-setting panel has raised the repo rate by 225 basis points this year in total, in order to control inflation

In the consecutive fifth hike this year, the RBI’s Monetary Policy Committee on Wednesday raised the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, making loans expensive. The policy rate is now at the highest level since August 2018. The RBI has maintained policy stance at ‘withdrawal of accommodation’.

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The latest 35-bps rate hike is in line with the market expectations.

This is the fifth consecutive repo rate hike this year. With this latest hike, the RBI’s rate-setting panel has raised the key policy rate by 225 basis points this year in total, in order to control inflation. The repo rate is the interest rate at which the RBI lends to the commercial bank.

While presenting the latest bi-monthly monetary policy statement, RBI Governor Shaktikanta Das said, “The global economy is still marred by uncertainty… As per IMF, one-third of the economies will contract this year or the next year. However, the Indian economy remains resilient… bank credit is growing in double digits… yet inflation remains elevated as in other countries.”

However, this time, the magnitude of the hike is lower as compared with the 50 bps increase each in the previous three policy reviews and a 40-bps hike in the off-cycle monetary policy review in May this year. Hundred basis points is equal to one percentage point.

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