New Delhi: The Reserve Bank of India (RBI) hiked the main interest rate by 40 basis points to 4.40 percent effective immediately on Wednesday.
RBI Governor Shaktikanta Das said the decision was made by the central bank’s monetary policy committee (MPC) during an off-cycle meeting held between May 2-4.
He explained that the decision was made in light of rising inflation, geopolitical concerns, high crude oil prices, and global commodity shortages, all of which have had an impact on the Indian economy.
The RBI Governor stated in his nearly half-hour speech that food inflation is projected to continue high as a result of spillovers from global wheat shortages affecting domestic wheat prices, despite adequate domestic supplies.
Due to the Russia-Ukraine war, edible oil prices may firm up as major producing countries have imposed export restrictions, he said.
RBI’s Hike Effect On Sensex
After the Reserve Bank of India (RBI) announced a hike in the key interest rate, Indian equities indices fell dramatically in late trade on Wednesday. In an off-cycle meeting today, the RBI surprised everyone by raising the repo rate by 40 basis points (bps) to 4.40 percent. The rate at which a central bank loans money to banks is known as the repo rate.
The 30-share BSE Sensex fell 1,419 points, or 2.49 percent, to 55,557 points, while the broader NSE Nifty fell 429 points, or 2.51%, to 16,640 points.
Mid- and small-cap stocks were down 1.78 percent and 1.88 percent, respectively, on the Nifty Midcap 100.
The National Stock Exchange’s 15 sector indices were all trading in negative territory. Nifty Consumer Durables and Nifty Financial Services fell 3.19 percent and 2.32 percent, respectively, underperforming the index.
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