From The Economic Times · ET Bureau · · 1m 20s
RBI Raises Repo Rate to 5.5% Under Sanjay Malhotra
RBI hikes repo rate to 5.5% as inflation risks push policy to 'calibrated tightening'.
In brief
RBI hikes repo rate to 5.5% as inflation risks push policy to 'calibrated tightening'. RBI raised repo rate to 5.5% in first move under Governor Sanjay Malhotra, signaling possible further hikes amid inflation concerns. Originally reported by The Economic Times.
RBI Raises Repo Rate
The Reserve Bank of India raised the repo rate to 5.5% in its first policy move under Governor Sanjay Malhotra.
Policy Stance Shift
The Monetary Policy Committee shifted from 'neutral' to 'calibrated tightening' with four of six members voting to change the stance.
Inflation Outlook
The MPC stated inflation and its outlook are not benign as they were last year, signaling persistent risks.
Governor's Statement
Governor Malhotra said rate cuts are off the table in the near term and policy action can only be a hike or pause.
Market Reaction
The 10-year bond yield climbed to 7.24%, and the rupee retreated to 96.84 per dollar, near its record low.
Rupee Valuation
Malhotra described the rupee as 'undervalued' and short-term market behavior as 'irrational'.
Rate Impact
Home and small business loans will rise immediately, but deposit rates are unlikely to increase soon due to liquidity.
Expert Predictions
Kanika Pasricha expects another 50-basis point increase by year-end, while HDFC Bank and SBI analysts predict further hikes.
The headline
RBI raised repo rate to 5.5% in first move under Governor Sanjay Malhotra, signaling possible further hikes amid inflation concerns.
