RBI does rate-lifting to keep India in reckoning. Key policy takeaways

The Monetary Policy Committe (MPC), the rate setting panel of the Reserve Bank of India, has unanimously decided to hike lending rates by 50 bps to 5.40%, above the pre-pandemic level of 5.15%, RBI Governor Shaktikanta Das announced on Friday. This is the third consecutive rate hike after a 40 basis points in May and 50 basis points increase in June. In all, the RBI has raised benchmark rate by 1.40 per cent since May this year. Here is a list of key announcements made ..

• • Standing Deposit Facility (SDF) rate has been adjusted to 5.15%. Marginal Standing Facility and bank rate revised to 5.65%
  • The MPC has retained its stance of ‘withdrawal of accommodation’ as it seeks to roll back pandemic-era measures against rising inflationary pressures
  • The central bank now sees inflation for Q2 at 7.1%; Q3 at 6.4%, and Q4 at 5.8%. In June policy, the central bank had forecast inflation at 7.5% for Q1, 7.4% for Q2, 6.2% for Q3 and 5.8% for Q4. The outlook:
• Elevated risks emanating from protracted geopolitical tensions, the upsurge in global financial market volatility and tightening global financial conditions continue to weigh heavily on the outlook
• The appreciation of the US dollar can feed into imported inflation pressures
• Cost pressures are expected to get increasingly transmitted to output prices across the manufacturing and services sectors.