18 key takeaways from the RBI Monetary Policy

India

oi-Vicky Nanjappa

Mumbai,
Aug
05:
The
Reserve
Bank
of
India
(RBI)
on
Friday
raised
the
benchmark
lending
rate
by
50
basis
points
to
5.40
per
cent
to
tame
inflation,
news
agency
PTI
reported.

Following
are
the
highlights
of
the
RBI’s
fourth
monetary
policy
review
of
fiscal
year
2022-23
announced
by
Governor
Shaktikanta
Das:

RBI
raises
repo
rate
by
50
bps
to
5.4%,
third
increase
in
a
row

• Key
  short-term
  lending
  rate
  (repo)
  raised
  by
  50
  basis
  points
  (bps)
  to
  5.4
  per
  cent;
  third
  consecutive
  hike

• In
  all,
  140
  bps
  hike
  in
  repo
  since
  May
  2022
  to
  check
  inflation

• GDP
  growth
  projection
  for
  2022-23
  retained
  at
  7.2
  per
  cent
  (pc).

• GDP
  growth
  projection:
  Q1
  at
  16.2
  pc;
  Q2
  at
  6.2
  pc;
  Q3
  at
  4.1
  pc;
  and
  Q4
  at
  4
  pc

• Real
  GDP
  growth
  for
  Q1:2023-24
  projected
  at
  6.7
  per
  cent

• Domestic
  economic
  activity
  exhibiting
  signs
  of
  broadening

• Retail
  inflation
  projection
  too
  retained
  at
  6.7
  pc
  for
  2022-23

• Inflation
  projection:
  Q2
  at
  7.1
  pc;
  Q3
  at
  6.4
  pc;
  and
  Q4
  at
  5.8
  pc;
  Q1:2023-24
  at
  5
  pc

• India
  witnessed
  large
  portfolio
  outflows
  of
  USD
  13.3
  billion
  in
  FY23
  up
  to
  August
  3

• Financial
  sector
  well
  capitalised
  and
  sound

• India’s
  foreign
  exchange
  reserves
  provide
  insurance
  against
  global
  spillovers

• Monetary
  Policy
  Committee
  decides
  to
  remain
  focused
  on
  withdrawal
  of
  accommodative
  stance
  to
  check
  inflation

• Depreciation
  of
  rupee
  more
  on
  account
  of
  appreciation
  of
  US
  dollar
  rather
  than
  weakness
  in
  macroeconomic
  fundamentals
  of
  the
  Indian
  economy

• RBI
  to
  remain
  watchful
  and
  focused
  on
  maintaining
  stability
  of
  rupee

• Rupee
  depreciated
  by
  4.7
  pc
  against
  US
  dollar
  this
  fiscal
  year
  till
  August
  4

• India’s
  foreign
  exchange
  reserves
  remain
  fourth
  largest
  globally

• Mechanism
  to
  be
  activated
  to
  allow
  NRIs
  to
  use
  Bharat
  Bill
  Payment
  System
  for
  payments
  of
  utility
  and
  education
  on
  behalf
  of
  their
  families
  in
  India

• Next
  meeting
  of
  rate-setting
  panel
  scheduled
  for
  September
  28-30,
  2022.