The Monetary Policy Committee (MPC) meeting, which lasted three days, began on August 3 with the presence of MPC members and RBI governor Shaktikanta Das. The biweekly monetary policy for FY23 will be announced by the MPC, today August 5. The biggest issue at hand is inflation, which has increased to a level not seen in several years and is forcing major central banks to hike interest rates.
The RBI began the rate hike cycle this year with an unexpected 40 basis point increase in the repo rate in May and another one of 50 basis points in June. In contrast to the US Fed, which raised its key rate by 225 basis points to battle persistent inflation, the central bank has currently boosted the repo rate by 90 basis points.
Right now, the policy repo rate is 4.90 percent. As a result, the marginal standing facility rate, standing deposit facility rate, and bank rate have all been changed to 4.65 percent, 4.65 percent, and 5.15 percent, respectively.
Inflation would remain above 6 percent through the third quarter of FY23, according to the RBI's June 2022 policy, and would only briefly drop below 6 percent in Q4. With risks fairly distributed, the RBI forecast inflation to be at 6.7 percent in 2022–2023, with Q1 values of 7.5 percent, Q2 values of 7.4 percent, Q3 values of 6.2 percent, and Q4 values of 5.8 percent. These forecasts were made with the presumption that the monsoon in 2022 will be typical and that crude oil will cost, on average, $105 per barrel (in the Indian basket).
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