The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday hiked the key Repo Rate by 35 basis points (bps) to 6.25 per cent in its December 2022 meeting, continuing its fight against inflation.

The central bank has raised its key policy rate as inflation continues to stay above its tolerance band. The RBI had slashed the Repo Rate in March 2020 with an aim to cushion the impact of COVID-induced lockdown and maintained a status quo in the benchmark interest rate for almost two years before increasing it on May 4, 2022.

The RBI has raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May. Delivering the MPC announcements, RBI Governor Shaktikanta Das said that the policy rate remained accommodative and noted that the core inflation was indicating stickiness. The medium-term inflation outlook was exposed to global developments and weather.

Mr Das said that the FY23 real GDP forecast had been lowered to 6.8 per cent – 0.1 per cent lower than revised estimates released on Tuesday by the World Bank.

In addition, the RBI has also maintained FY23 Consumer Price Index (CPI) inflation forecast at 6.7 per cent.

The RBI chief announced that the MPC decided to remain focused on the withdrawal of accommodation and added that the Standing Deposit Facility (SDF) rate stood adjusted to 6 per cent and the Marginal Standing Facility (MSF) Rate and the Bank Rate to 6.50 per cent each.