The Reserve Bank of India (RBI) governor Shaktikanta Das announced a repo rate hike of 25 basis points (bps), taking the key benchmark interest rate to 6.5 percent on Wednesday.
The MPC's decision was split 4-2. This is the first rate hike in 2023. Before this, the repo rate was hiked by 35 bps on December 7.
Das also announced that the MPC has decided to focus on withdrawal of the "accommodative stance" as the "situation does not look so grim now". The MPC met on February 6, and the meeting concluded on February 8.
Das said that amid volatile global developments, the Indian economy remains resilient. However, the weak global demand and the current economic environment would be a drag on domestic growth. The central bank will maintain a "strong vigil" on the economic situation.
Das said that the advance estimates of the National Statistical Office (NSO) had pegged the real GDP growth at 7 per cent in FY23. For FY24, he added, the growth rate is expected to be 6.4 per cent. In the latest Economic Survey of the finance ministry, growth projection was 6-6.8 per cent for 2023-24.
RBI Governor said that the "world economy does not look so grim now", and the inflation has been coming down. In Q4, the retail inflation is expected to average 5.7 percent. But the core inflation remains "sticky". For FY23, the inflation projection has been kept at 6.5 percent. For FY24, the inflation has been pegged at 5.3 percent.