This is the fourth straight raise by the RBI, which has has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May.
While announcing the third bi-monthly monetary policy review Friday, RBI Governor Shaktikanta Das said reduction on lending rate has reduced the burden on households.
RBI announces fresh lending support to aviation, tourism & other sectors as MPC keeps key policy rates unchanged. RBI Governor Das says Covid spread in rural India poses risk to growth.
New G-SAP tool is RBI’s way of keeping govt’s interest burden low. But amid inflation concerns, it also has to raise interest rates to prevent price rise.
Many experts argued against retaining 4% plus-minus 2% target, while some wanted to scrap the framework altogether. But it provides stability, can help growth.
Inflation has been consistently over 6% over the last few months on account of rising food prices and supply constraints. It touched a 77-month high of 7.6% in Oct.
The reconstituted Monetary Policy Committee, which met from 7 to 9 October, had decided to keep the benchmark lending rates unchanged in view of the hardening of retail inflation.
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