Mumbai: On expected lines, the Reserve Bank of India (RBI) on Friday raised the repo rate by 50 basis points to 5.9 per cent in a bid to contain inflation which has been above its comfort level for the past many months.
Repo rate is the interest rate RBI charges commercial banks for borrowing cash. If RBI raises the repo rate, banks increase lending rate for borrowers. This means loan EMIs for consumers going up.
The RBI move is in line with the global trends of tightening monetary policy adopted by central banks to check spiralling price rise.
“Based on an assessment of the macro economic situation and its outlook, the MPC (Monetary Policy Committee) decided by a majority of five members out of six to increase the policy repo rate by 50 basis points to 5.9 per cent with immediate effect,” RBI Governor Shaktikanta Das while announcing the monetary policy.
Consequently, the standing deposit facility (SDF) rate stands adjusted to 5.65 per cent and the marginal standing facility (MSF) and bank rate to 6.15 per cent.
The MPC also decided by a majority five out of six members to remain focussed on withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.
