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Inflation to remain above 6% till Oct-Dec as RBI hikes repo rate

IndiaInflation to remain above 6% till Oct-Dec as RBI hikes repo rate

The ICB today raised its interest rates for the second time in a month – by 50 basis points, inflation is to remain above 6% till Oct-Dec.

This was higher than last month’s hike of 40 basis points and the base interest rate at which the central bank lends is now at 4.9% raising its inflation projection for the current fiscal to 6.7%.

According to media reports, the Monetary Policy Committee (MPC), headed by the RBI Governor Shaktikanta Das, unanimously voted for the latest rate hike, and the Consumer Price Index (CPI) based inflation, increased for the seventh straight month to touch an 8-year high of 7.79% in April.

In order to further deepen the reach and usage of the Unified Payments Interface (UPI), the Reserve Bank of India on Wednesday proposed to allow the linking of credit cards to the instant real-time payment system.

Experts, however, believe that the market has also “priced in” the rate hike, meaning that the impact of higher interest rates has already been anticipated by the stock markets.

This move is part of a long crusade that the Indian government and the central bank crusade against the rising cost of essentials and non-essentials in the country. For the month of April, the consumer price #inflation touched 7.8%, stressing out household budgets.

The repo rate still remains below its pre-pandemic level,” says Shaktikanta Das, Governor of the Reserve Bank of India reassuringly while making the announcement.

The RBI Governor, Das Shaktikanta explains the rationale behind the rate hike, and speaks on the various measures to control liquidity. #RBIPolicy #BQLive

However, inflation still remains high, financial stress results in poor credit growth and less capital spending and the Indian economy is like a paper boat being tossed in a raging storm.

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