RBI raises key policy rate by 50 basis points

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MUMBAI: The Reserve Bank of India’s key policy repo rate was raised by 50 basis points on Friday, the third increase in as many months to cool stubbornly high inflation.
With June retail inflation hitting 7%, economists polled by Reuters had expected another rate hike, but views were widely split between a 25 bps move or a 50 bps increase.
The monetary policy committee (MPC) raised the key lending rate or the repo rate to 5.40%.
The Standing Deposit Facility rate and the Marginal Standing Facility Rate were accordingly adjusted higher by the same quantum to 5.15% and 5.65%, respectively.
The RBI caught markets off guard with a 40 bps hike at an unscheduled meeting in May, followed by 50 bps increase in June, but prices have shown little sign of cooling off yet.
With inflation seen holding above the top of the central bank’s 2-6% tolerance band for at least the rest of 2022, more rate…

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