The monetary policy committee of the Reserve Bank of India has raised the repo rate by 50 basis points to 5.40 per cent in order to contain the persistently high inflation.
Raising interest typically suppress demand in the economy, thereby helping inflation to decline.
The three-day monetary policy committee meeting commenced on Wednesday.
Today’s hike takes the repo rate above pre-pandemic levels of 5.15 per cent.
In line with the global trend of monetary policy tightening to cool off inflation, the RBI has so far hiked the key repo rates — the rate at which the central bank of a country lends money to commercial banks — by 140 basis points.