Mumbai: In a bid to tame inflation, the Reserve Bank of India (RBI) on Wednesday raised the benchmark lending rate by 35 basis points to 6.25 per cent. Inflation has remained above its tolerance level for the past 11 months.

With the latest hike, the repo rate or the short-term lending rate at which banks borrow from the central bank now has crossed 6 per cent. This is the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August and September. In all, the RBI has raised the benchmark rate by 2.25 per cent since May this year.

Commenting on the monetary policy announcement, Sanjiv Mehta, President, FICCI, said: “The Reserve Bank’s policy action hiking the policy repo rate by 35 bps was widely anticipated as the war against inflation is still far from over.”

“Retail inflation has remained above the central bank’s tolerance threshold of 6 per cent through the year 2022. Core inflation remains sticky, and uncertainty continues to surround the RBI’s near-term inflation outlook given the complex geo-political developments in Europe, recurrence of adverse climate related events and the still high commodity prices globally,” he said.

“While the CPI inflation projection has been maintained at 6.7 per cent for 2022-23 and some early signs of inflation cooling down on a sequential basis are coming to fore, we need to see this trend emerge on a durable basis for RBI to indicate a change in stance,” he added.

“Furthermore, while the Indian economy remains resilient, the RBI has revised downward its GDP growth forecast for 2022-23 to 6.8 per cent from 7 per cent in the last monetary policy announcement. Even at this slightly lower rate of growth, India continues to be amongst the fastest growing economies globally and we are encouraged by the Governor’s statement that liquidity will be made available for productive activities as required so that the growth impulses get nurtured,” added Mehta. /BI/