Winning Business Desk

Mumbai. The Reserve Bank of India (RBI) has not made any change in interest rates in the first meeting of the new financial year 2022-2023. The repo rate has been kept unchanged at 4% and reverse repo at 3.35%. That is, there will be no difference on your EMI. This is the 11th time in a row that the central bank has kept the repo rate stable. At the same time, RBI has reduced the GDP growth forecast for FY23 from 7.8% to 7.2%. The inflation rate has been increased from 4.5% to 5.7%. RBI Governor Shaktikanta Das said that the conservative stance on rates remains intact. With the consent of all the members, it has been decided not to change the interest rates. He also talked about gradually taking out the liquidity from the market.

At the same time, the RBI Governor expressed concern over the supply chain and said that the global market is under pressure regarding the supply chain. Regarding inflation, the RBI Governor said that given the high volatility in crude oil prices since the end of February and uncertainty from geopolitical tensions, growth and inflation forecasts are risky.

Inflation to be 6.3% in the first quarter

RBI has projected inflation to be 6.3% in the first quarter, 5% in the second quarter, 5.4% in the third quarter and 5.1% in the fourth quarter. RBI holds policy review meetings every two months. The last time the repo rate changed was on 22 May 2020. Since then the repo rate has remained at a historic low of 4%. Repo rate is the rate at which banks get loans from the RBI, whereas reverse repo rate is the rate at which banks get interest on keeping their money with RBI. Madan Sabnavis, Chief Economist, Bank of Baroda said, “The credit policy has surprised the markets with changes in both GDP and inflation estimates. Reducing the GDP growth estimate to 7.2% and raising the inflation estimate to 5.7% is a clear indication that the repo rate will be increased in the coming days.