New Delhi: Reserve Bank of India (RBI) on Wednesday raised key interest rate by 40 basis points to 4.40 per cent with immediate effect. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.15-% and the marginal standing facility (MSF) rate and the Bank Rate to 4.65%.
The unscheduled announcement stemmed from the decision that was taken by the monetary policy committee (MPC) of the central bank in its off-cycle meeting held between May 2-4.
The RBI has cited rising inflation, geo-political tensions, high crude oil prices and shortage of commodities globally, as major reasons for the hike.
“Heightened uncertainty surrounds the inflation trajectory, which is heavily contingent upon the evolving geopolitical situation. Global commodity price dynamics are driving the path of food inflation in India, including prices of inflation sensitive items that are impacted by global shortages due to output losses and export restrictions by key producing countries,” the statement pointed out
The MPC also decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth,” the RBI said in a statement.