RBI Monetary Policy – Aug 2022: Reserve Bank of India (RBI) announced the RBI Monetary Policy Review for August 2022 on Friday. In its latest policy iteration,RBI’s Monetary Policy Committee (MPC), which is headed by RBI Governor Shaktikanta Das, has decided to hike the Repo Rate by 50 basis points. This is the third consecutive time that the Central Bank has decided to tinker with the Repo Rate, which is the rate at which it lends to the commercial banks. With the latest revision, RBI’s Repo Rate now stands at 5.4%. The move of Repo Rate Hike by RBI is aimed at taming the high retail inflation that Indian Economy is going through in the last quarter.
Watch RBI Governor’s MPC Press Conference
RBI reiterates our commitment to maintain price and financial stability to place our economy on a sustainable path of growth. Our actions have helped the economy to tide over a series of shocks in the last two and half years: RBI Governor @DasShaktikanta@FinMinIndiapic.twitter.com/EcyMVVtvQx
— Prasar Bharati News Services & Digital Platform (@PBNS_India)
August 5, 2022
RBI Monetary Policy: Key Rates Hiked
The hike in the Repo Rate introduced by RBI this Friday is the 3rd consecutive increase in three months. Prior to this, RBI had hiked the Repo Rate by 40 bps in May and 50 bps in June this year. The latest hike has put RBI’s repo rate to pre-pandemic level i.e., back to the late-2019 levels. The rate was decided after three-day deliberations carried out amid the RBI’s Monetary Policy Committee (MPC) to decide the bi-monthly monetary policy.Along with hike in the Repo Rate, RBI Governor also announced adjustment in the Marginal Standing Facility (MSF) and Bank Rate to 5.65% while the Standing Deposit Facility, SDF has been raised to 5.15%
- Repo Rate: 5.4% (hiked by 50 bsp)
- SDF Rate: 5.15%
- MSF and Bank Rate: 5.65%
The real GDP growth projection for 2022-23 is retained at 7.2% with Q1- 16.2%, Q2- 6.2%, Q3 -4.1% and Q4- 4% with risks broadly balanced. The real GDP growth for Q1 2023-24 is projected at 6.7%: RBI Governor Shaktikanta Das pic.twitter.com/lyrW1anQaf
— ANI (@ANI)
August 5, 2022
GDP Growth Forecast Retained at 7.2%
Talking about Economic Outlook, RBI Governor Shaktikanta Das said that the Central Bank retains its economic growth projection to its earlier level. In its latest Monetary Policy, RBI has retained India’s GDP Growth Forecast for FY23 at 7.2%. In terms of Quarterly Projections, RBI has said Q1 for the ongoing fiscal at 16.2% while Q2 growth forecast has been retained at 6.2%, 4.1% for Q3 and 4% for Q4.
RBI Growth Projections (Quarterly)
- Q1:16.2%
- Q2:6.2%
- Q3:4.1%
- Q4:4%
RBI reiterates our commitment to maintain price and financial stability to place our economy on a sustainable path of growth. Our actions have helped the economy to tide over a series of shocks in the last two and half years: RBI Governor @DasShaktikanta@FinMinIndiapic.twitter.com/EcyMVVtvQx
— Prasar Bharati News Services & Digital Platform (@PBNS_India)
August 5, 2022
Inflation Forecast Remains Unchanged
On the other hand,RBI haskept the inflation forecast unchanged at 6.7 percent, as core inflation remains elevated. Retail Inflation in India has eased a little to settle at 7.01%, but it is still quite high as compared to the comfortable level of 6% as prescribed by RBI. CPI also remains above uncomfortable levels with Consumer prices in India had surged to an eight-year high at 7.80% in April. In the light of this, RBI has decided to implemented the third hike in three months in Repo Rate to tame inflation.
RBI Growth Projections (Quarterly)
- Q2: 6.2%
- Q3:6.4%
- Q4:5.8%
- Q1 (FY24): 5%
Bharat Bill Payment Systems for NRIs
RBI Governor in his address about Monetary Policy also informed that the Central Bank has proposed that the Bharat Bill Payment System should be enabled for NRIs. This facility will allow NRIs to make bill payments for utilities, education and other payments on behalf of their families in India.
BBPS – Bharat Bill Payment System, is a national-level bill payment ecosystem that was launched in 2017 by RBI. BBPS is managed by National Payments Corporation of India has is currently home to over 20,000 billers. Every month, around 8 crore transactions are processed under BBPS with NCPI reporting transactions worth Rs 15,154 Crores being managed in June through BBPS.
Also Read: RBI lifts restrictions on Mastercard: Why RBI had imposed restrictions on Mastercard?
