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RBI’s sudden Repo Rate increase- Key MPC notings

In case you are wondering what triggered the RBI’s Monetary Policy Committee (MPC) to suddenly increase the Repo Rate by 40 BPS (to 4.40%), below are the key points from its Minutes of Meeting

  1. Growth pointers: a. Both IMF and WTO have cut their global growth projections. b. Domestically, Urban demand appears to be expanding but weakness in rural demand. Investment activity is gaining traction. Merchandise exports recorded double digit expansion for the 14th consecutive month in April. Non-oil non-gold imports also grew robustly on the back of improving domestic demand
  2. Inflation pointers: CPI inflation surged to 7.0 % in Mar 22, up from 6.1 % Feb 22, impacted by geopolitical spillovers. Food inflation increased by 154 BPS to 7.5% and core inflation rose by 54 BPS to 6.4%. IMF projects inflation to increase by 2.6% to 5.7% cent in advanced economies in 2022 and by 2.8 % to 8.7% in emerging and developing economies
  3. Outlook: Uncertainty around inflation, contingent upon the evolving geopolitical situation. Global commodity price dynamics may drive food inflation in India. Crude oil prices remain high but volatile. Possible Supply chain disruptions may add to costs. MPC expects inflation to rule at elevated levels

You can access the MPC MoM here https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53652

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