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.
Based on the assessment of the macroeconomic situation and the outlook, the Monetary Policy Committee voted unanimously to increase the policy repo rate by 40 basis points to 4.40 per cent with immediate effect, Das said.
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.