The Reserve Bank of India (RBI) on Wednesday hiked the repo rate by 35 basis points (bps) to 6.25 per cent.
"MPC was of the view that further caliberated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects...," the RBI Governor said on Wednesday.
Monetary Policy Committee's majority view was to withdraw accommodative stance, he said. Talking about inflation, Das said it would stay above 4 per cent for the next 12 months in India.
Meanwhile, RBI lowered the economic growth projection to 6.8 per cent from the earlier estimate of 7 per cent for the current fiscal. However, Das said despite a marginal downward revision in GDP growth at 6.8 per cent, India remains the fastest growing major economy.
The RBI Governor cautioned that the battle against inflation is yet not over as risks remain, adding that RBI's action remains nimble in the best interest of the economy.
"RBI sees inflation 6.7 per cent during FY'23 with Q3 at 6.6 per cent and Q4 at 5.9 per cent," Das said.
Das said the movement of the rupee has remained least disruptive as compared to peers amid the strengthening US dollar.
The central bank had last raised the key benchmark rate by 50 basis points on September 30.
With this, the repo rate has been raised by 225 bps since April 2022.
After 35 bps hike in the repo rate, Das also said the Central bank's action is in line with market expectations.
On September 30, the RBI had hiked the key policy rate (repo) by 50 basis points with an aim to check inflation.
It was the third successive hike of 50 bps. Before the September hike, the central bank had raised the repo rate by 50 bps each in June and August, and 40 bps in May.
"The 35 bps hike is as per market expectations. The positive is RBI has broken the 50-bps rate-hike trend as growth headwinds intensify amid easing inflation pain. Until RBI isn't completely sure on inflation's downward trend it may opt for a smaller rate increase, as it has to also focus on growth amid bets of easing inflation pressure. Corporate India for some time now is reeling under input cost pressure and rising interest rates aren't helping them. With easing interest rates we may see India Inc relook to restart their capex plan," Anu Aggarwal, Head Corporate Banking, Kotak Mahindra Bank, said.
