The health of the Indian Banking sector, the Reserve Bank of India (RBI) recently raised the repo rate by 25 basis points to 6.5% from 6.25%. The announcement was made by the Governor of Reserve Bank of India Shaktikanta Das.
What is RBI raises Repo Rate (RR)?
Repo Rate (RR) is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities.
The Governor of the Reserve Bank Shaktikanta Das said, “Unprecedented events of the last three years have put to test monetary policy across the world.”
“Emerging market economies are facing sharp tradeoffs between supporting economic activity and controlling inflation while preserving policy credibility”, Shaktikanta Das added.
As per inflations are in concern Reserve Bank of India has projected it to be 6.5% in this financial year and 5.3% in the next.
What is inflation?
Inflation measures how much more expensive a set of goods and services has become over a certain period. This is usually in a year. The most well-known indicator of inflation is the Consumer Price Index (CPI).
Shaktikanta Das, governor of RBI, says, “Indian economy remains resilient amidst volatile global developments, real gross domestic product (GDP) growth is estimated at 7.0% for 2022-23 as per first account advance estimates of National Statistical Office (NSO).”
“The real GDP growth for 2023-24 is projected at 6.4% with the first quarter (Q1) at 7.8%, Q2 at 6.2%, Q3 at 6% & Q4 at 5.8%”, Shaktikanta Das added.
What is GDP?
GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country.