The Reserve Bank of India (RBI) raised the repo rate, its policy rate, by 0.25% to 6.50% at its meeting today, as expected. This is the sixth consecutive rate hike by the RBI as it aims to combat high inflation levels in the country. Despite recent signs of retail sales inflation peaking, the RBI remains focused on withdrawing monetary easing.
The RBI committee stated that its monetary policy remains focused on withdrawing monetary easing. Analysts expect that this latest rate hike may be the last in the RBI’s current rate hike cycle.
India’s retail sales inflation fell to 5.72% in December, down from 5.88% in November, falling below the RBI’s inflation target of 2-6% for the second consecutive month. This recent trend is a positive sign for the country’s economy, as it shows inflation may be slowing down.
This latest move by the RBI is expected to have a significant impact on the country’s economy and financial markets, as interest rates play a critical role in determining the cost of borrowing and the general level of economic activity.