RBI Hikes Key Interest Rate To 4.40%, First Since May 2020, Cites Inflation

Mumbai, May 4: In a surprise move, the Reserve Bank of India (RBI) on Wednesday increased the policy repo rate by 40 basis points to 4.40 per cent with immediate effect.

Addressing a press conference, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) has unanimously voted to increase the policy repo rate by 40 basis points or 0.40 per cent.
The repo rate is the interest rate at which the RBI lends short-term funds to banks.

He said the decision was taken in view of rising inflation, geo-political tensions, high crude oil prices and shortage of commodities globally, which have impacted Indian economy.

The decision was taken in the unscheduled meeting of the Monetary Policy Committee. “The MPC continues to be accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward,” the RBI Governor said.

This is the first increase in the policy repo rate since May 2020.