Statsguru: RBI hikes repo rate, projects inflation at 4.8% in H2 FY19

While food inflation has slowed of late, the RBI expects the recent hikes in minimum support prices (MSPs) announced by the government to have a direct impact on inflation

Last week, the monetary policy committee (MPC) raised the benchmark repo rate by 25 bps for the second time in two months. As seen in Chart 1, the repo rate now stands at 6.5 per cent. 

The rate hike came against the backdrop of the retail inflation rate rising to 5 per cent in June with core inflation rising to a high of 6.35 per cent (Chart 2). 

In its review, the RBI has also upped its inflation forecasts, albeit marginally, to 4.8 per cent in the second half of FY19, rising to 5 per cent in the first quarter