The Reserve Bank of India (RBI) on September 30 announced a 50 basis points hike in the repo rate stepping up its fight against persistently high inflation.
Repo is the rate at which the central bank lends short-term funds to banks. One bps is one-hundredth of a percentage point. With the latest rate hike, the repo rate now stands at 5.9 per cent.
Announcing the policy decision, RBI Governor Shaktikanta Das highlighted the worry of the rate-setting panel on inflation and said the central bank is watching the price situation closely
A 50 bps increase in the repo rate this week is the fourth consecutive one since May. This has taken the repo rate, at which the RBI lends short-term funds to banks, to 5.90 per cent – the highest level since April 2019 – from 5.40 per cent.
The Monetary Policy Committee (MPC) began its three-day meeting on September 28 and will announce the outcome on September 30.
The MPC has increased the policy repo rate by 140 basis points since May to quell inflationary pressure. The consumer price index (CPI) based retail inflation, which had started showing signs of moderation since May, has again firmed up to seven per cent in August. The RBI takes into account retail inflation while framing its bi-monthly monetary policy.
-India has received responses from four to five countries for its mechanism for international trade settlement in rupees, while other nations have also shown interest, a deputy governor at the Reserve Bank of India said on September 30.
-“The response has been fairly good but since the process involves a lot of vetting at the level of banks, at the level of the central bank, at the level of the government, the initial process is taking some time,” T Rabi Sankar told reporters in Mumbai at a post-policy interaction. Sankar did not respond to a query on whether Russia was one of the countries that was interested in the mechanism.
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-The Reserve Bank of India (RBI) has been in talks with stakeholders for implementation of tokenisation and there is no reason to delay it any further, said Deputy Governor T Rabi Sankar ahead of new card storage norms kicking in from October.
-"The feedback we have from all stakeholders is that it (ecosystem) is perfectly ready. I understand there are a few participants who may not be ready, but that would probably be because of their unwillingness to comply. We don't believe that we should hold back efforts because of such laggards," he said.
-The deadline to implement tokenisation has been delayed multiple times over the past two years at the request of stakeholders, most recently by three months from 30 June 2022.
Letter to government on failing to meet inflation target won't be made public: RBI Governor
Expectation is September inflation could be higher than 7%: RBI Governor Shaktikanta Das
-The message from Reserve Bank of India Governor Shaktikanta Das to markets on Friday is crystal clear -expect more rate hikes over the next few quarters - as the central bank continues its big battle against zooming prices even at the cost of hurting growth for the near term.
-There was enough hints, during the governor's address, to show that there isn't any compromise on the war against inflation. A 50-basis-point rate hike won't be the last in this rate hike cycle.
-Look at the numbers. By the RBI's own admission, the threat of high inflation is far from over. Das said the retail inflation is likely to average at 6 percent in the second half of this year and 6.7 percent for the full year, way above the upper tolerance level of 6 percent.
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