India central bank raises key repo rate by 40 bps in off-cycle move

THE Reserve Bank of India's (RBI) monetary policy committee (MPC) raised the key lending rate by 40 basis points on Wednesday (May 4), citing persistent inflationary pressures in the economy, governor Shaktikanta Das announced.

The MPC raised the key lending rate or the repo rate by 40 basis points to 4.40 per cent, Das said.

India's 10-Year benchmark bond yield was up at 7.41 per cent after RBI raised its policy rate.

Das said that MPC will retain its accommodative monetary policy stance at a time when globally inflation is rising alarmingly even as investment activity is showing some traction in the country.

"The MPC judged that the inflation outlook warrants an appropriate and timely response through resolute and calibrated steps to ensure that second-round effects of supply-side shocks on the economy are contained and long-term inflation expectations are kept firmly anchored," Das said.

"In the MPC's view, monetary policy response at this juncture would help to preserve macro-financial stability amidst increasing volatility in financial markets," he added. REUTERS