Mumbai: The Reserve Bank of India(RBI) on Wednesday increased the benchmark repo rate by 40 basis points to 4.40 per cent, even as it continues to maintain the accommodative policy stance.
This is the first time after almost four years that the RBI has increased the base rates. The last hike was announced on August 3, 2018 when the rates were increased from 6.25 per cent to 6.50 per cent, after which the RBI had started reducing the rates.
"The Monetary Policy Committee conducted an off-cycle meeting on May 2-4 and unanimously decided to increase the repo rates by 40 bps with immediate effect," RBI Governor Shaktikanta Das said.
The RBI had maintained a status quo on the rates at 4 per cent since May 22, 2020 when the rates were decreased from 4.4 per cent.
Das noted that the off-cycle meeting was held to reassess the evolving inflation growth dynamics and impact of the current economic development.
"MPC's action is aimed at containing inflation spike and re-anchoring the inflation expectations," he added.
The RBI has also increased the Cash Reserve Ratio (CRR) by 50 basis points to 4.5 per cent, which will come into effect from May 21, 2022. (UNI)