The Reserve Bank of India(RBI) today
increased the repo rate under the liquidity adjustment facility (LAF) by
25 basis points to 6.50 per cent with immediate effect. Similarly, the
standing deposit facility (SDF) rate was adjusted to 6.25 per cent and
the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per
cent.
RBI Governor Shaktikant Das announced the bimonthly policy review after
the Monetary Policy Committee meeting which had begun on Monday. While
announcing the policy review he said that on the basis of an assessment
of the current and evolving macroeconomic situation, the Monetary Policy
Committee decided to increase the policy repo rate. Governor said that
unprecedented events of the last three years have put to test monetary
policy across the world. Emerging market economies are facing sharp
tradeoffs between supporting economic activity and controlling inflation
while preserving policy credibility.
Shaktikant Das said that global growth is expected to decelerate during
2023. Due to softening of inflation from elevated levels central banks
have moderated the size and pace of rate actions but they are
reiterating their commitment to bring down inflation close to their
targets. The easing of inflation in the last two months was driven by
strong deflation in vegetables, which may dissipate with the summer
season uptick. The RBI Governor said that real GDP growth is estimated
at 7.0 per cent in 2022-23 and for next fiscal it is 6.4 per cent,
according to the first advance estimate of the National Statistical
Office (NSO). Inflation for 2022-23 is projected at 6.5 per cent, with
inflation for the fourth quarter to be estimated at 5.7 per cent, CPI
inflation for 2023-24 is projected at 5.3 per cent.
The MPC also decided to remain focused on withdrawal of accommodation to
ensure that inflation remains within the target going forward, while
supporting growth. Making some important announcements, RBI governor
said, to enhance transparency, reasonableness and consumer protection,
draft guidelines to be issued, on levy of penal charges and the bank
will obtain comments from stakeholders.
He said all inbound travellers to India will be permitted to use UPI for
their merchant payments (P2M) while they are in the country. To begin
with, this facility will be extended to travellers from G-20 countries
arriving at select international airports. RBI will launch a pilot
project on QR Code based Coin Vending Machine in 12 cities. These
vending machines will dispense coins against debit to the customer’s
account using UPI instead of physical tendering of banknotes.
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(With input from news agency language)
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