Mumbai, May 04: Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday announced a 40-basis-point hike in the key lending rate and raised the cash reserve ratio by 50 basis points.
Monetary Policy Committee (MPC) voted unanimously to increase the policy repo rate by 40 basis points (bps) to 4.40% with immediate effect, citing persistent inflationary pressures in the economy.
This is RBI’s first increase in borrowing rates since August 2018.
The MPC also hiked CRR (cash reserve ratio) by 50 basis points to 4.5 per cent from May 21.
“The decision today to raise repo rate may be seen as reversal of rate action of May 2020. In last month, we had set out a stance of withdrawal of accommodation. Today’s action need to be seen in line with that action,” said Das.