The Reserve Bank of India today announced repo rate increase by 25 basis points to 6.5 %.

The decision was announced by RBI Governor Shaktikanta Das. MPC decision was by 4 out of 6 majority.

Amid volatile global developments, Indian economy remains resilient, Das said.

The Monetary Policy Committee (MPC) in its February meeting has pegged real GDP growth for FY24 at 6.4% while growth for FY23 has been pegged at 7%. The MPC has forecast Q1FY24 growth at 7.8%, Q2 at 6.2%, Q3 at 6% and Q4 at 5.8%.

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The Reserve Bank of India (RBI) has hiked the repo rate by 25 basis points to 6.5%, maintaining its ‘withdrawal of accommodation’ stance. This was the second hike in two months, after the central bank had raised the rate by 25 basis points in June.

The repo rate is the rate at which banks borrow from the RBI and is an important tool for the central bank to control inflation. The RBI had kept the repo rate unchanged at 6.25% since February 2019, but the recent hike is a signal that the RBI is serious about curbing inflation.

The decision to raise the rate was taken by the Monetary Policy Committee (MPC) of the RBI, which is headed by Governor Shaktikanta Das. The MPC noted that inflation had risen to 5.4% in July, above the RBI’s target of 4%. The committee also noted that the global economy was slowing and that there were risks to the Indian economy from rising oil prices.

The RBI has also maintained its ‘withdrawal of accommodation’ stance, which means that it is not willing to provide any more stimulus to the economy. The central bank believes that the current rate of inflation is too high and any further stimulus could lead to an increase in prices.

The repo rate hike is likely to have an impact on the interest rates charged by banks. Banks are likely to increase the interest rates on loans, which will make them more expensive for borrowers. This could have a dampening effect on the economy, as people may be less willing to take out loans.

The RBI’s decision to maintain its ‘withdrawal of accommodation’ stance is also likely to have an impact on the stock market. Many investors are likely to be wary of investing in stocks, as the central bank is not willing to provide any more stimulus to the economy.

Overall, the RBI’s decision to raise the repo rate and maintain its ‘withdrawal of accommodation’ stance is likely to have an impact on the economy in the short-term. However, it is hoped that the central bank’s move will help to control inflation in the long-term and ensure that the economy remains on a stable footing.