RBI POLLICY JUNE 2022
The Reserve Bank Governor Shaktikanta Das headed six-member Monetary Policy Committee (MPC) on Wednesday unanimously voted to increase the benchmark interest rate or repo rate by 50 basis points to 4.90%, while hiking CPI inflation projection for the current fiscal year by 100 bps to 6.7%.
However, the MPC also voted unanimously to remain focussed on policy stance ‘withdrawal of accommodative’ while focus will be on capping inflation pressures, which are majorly driven by adverse supply shocks.
Consequently, the Standing Deposit Facility (SDF) rate adjusted to 4.65% and Marginal Standing Facility (SDF) adjusted to 5.15%, through which it intends to suck out excess liquidity in the system at lower rate without offering collateral to banks.
Inflation outlook for FY23 has been hiked to 6.7% from 5.7% announced in the April policy, while real GDP growth projection has been retained at 7.2% for FY23 with Q1 seen at 16.2%, Q2 seen at 6.2%, Q3 seen at 4.1% and Q4 seen at 4.0%.
The governor also flagged the inflation pressures due to global growth risks and geopolitical tensions. "The projections are likely to remain above the upper tolerance level of 6 per cent through the first three quarters of 2022-23," the Governor mentioned.
The MPC has noted that the persisting inflationary pressures could set in motion second round effects on headline CPI. Hence, there is a need for calibrated monetary policy action to keep inflation expectations anchored and restrain the broadening of price pressures.