Reserve Bank of India (RBI) has risen the benchmark lending rate by half a percentage point to 4.90 per cent on Wednesday. The top bank has decided unanimously to keep the policy stance of ‘withdrawal of accommodation.’
"The MPC unanimously decided to raise the rates on the back of inflationary pressures and higher supply shocks," said RBI Governor Shaktikanta Das.
Inflation is likely to remain above 6 per cent in the first three-quarters of the current fiscal. “Our steps will be calibrated, focussed on bringing down inflation to the target level," he said.
RBI revises inflation projection for FY23 to 6.7 per cent from 5.7 per cent earlier
| Period | From | To |
| April-June | 6.3% | 7.5% |
| July-September | 5.8% | 7.4% |
| October-December | 5.4% | 6.2% |
| January-March 2023 | 5.1% | 5.8% |
RBI retains GDP growth forecast for FY23 at 7.2 per cent
| Period | Forecast |
| April-June | 16.2% |
| July-September | 6.2% |
| October-December | 4.1% |
| January-March 2023 | 4.0% |
Last month, in its off-cycle monetary policy review the central bank hiked the policy repo rate by 40 basis points or 0.40 per cent to 4.4 per cent. This was the first increase in the policy repo rate in nearly two years. The repo rate is the interest rate at which the RBI lends short-term funds to banks.
Inflation has been above the RBI's 2-6 per cent target band since the beginning of this year. As per the latest available data, India's Consumer Price Index (CPI) based inflation surged to an eight-year high of 7.79 per cent in April. It has been above 6 per cent since January 2022.
In April, the RBI revised upward the inflation forecast for the current financial year to 5.7 per cent from its earlier projection of 4.5 per cent announced in February.