MUMBAI (Reuters) – The Reserve Bank of India’s key repo rate was raised by 35 basis points (bps) on Wednesday as widely expected, the fifth straight increase, amid expectations that inflation has likely peaked and concerns around economic growth resurfaced.
The monetary policy committee (MPC), comprising three members from the RBI and three external members, raised the key lending rate or the repo rate to 6.25% in a majority decision. Five of the six members voted in favour of the decision.
A strong two-thirds majority in a Reuters analysts poll had predicted a 35 bps increase, smaller than its last three hikes of 50 bps each, and said it was still too soon for the central bank to take its eye off inflation, which has stayed above the upper end of the RBI’s 2-6% tolerance band all year.
The standing deposit facility rate and the marginal standing facility rate were also increased by the same quantum to 6.00%and 6.50%, respectively.
India’s annual retail inflation eased to a three-month low of 6.77% in October, helped by a slower rise in food prices and a higher base effect, strengthening bets on smaller rate increases by the RBI going ahead.
(Reporting by Swati Bhat and Chris Thomas; Editing by Kim Coghill)
