Governor of the Reserve Bank of India (RBI)
in his stern measure to tackle inflation has hiked repo rate yet again by 25
basis points (bps) to 8%. RBI has kept cash reserve ratio (CRR) unchanged at
4%, however,
in its monetary
policy review on Tuesday. The change has been extended to reverse repo rate,
which stands adjusted at 7%, while the marginal standing facility (MSF) has
been increased as well along with the Bank Rate at 9%.
Governor Raghuram Rajan was widely expected
to hold interest rates. The rates were unchanged even in the last fiscal policy
review held on 18 December. In the second quarter review on 29 October, repo
rate was hiked and marginal standing facility (MSF) was cut by 25 bps each. It
is evident that the move to hike repo rate is an after effect of the lately
released Report of the Expert Committee to Revise and Strengthen the Monetary
Policy Framework by Deputy Governor RBI, Urjit Patel. The report had
recommended anchoring CPI inflation to review RBI monetary policy.