How effective are RBI rate hikes?
SummaryMaybe we are devoting much more time and attention to parsing RBI’s monetary policy actions than they deserve
On Friday, the Reserve Bank of India’s (RBI’s) monetary policy committee (MPC) raised the repo rate by 50 basis points to 5.4%. The repo rate is the interest rate at which the RBI lends to commercial banks. One basis point is 0.01%. With this, the repo rate is now higher than in February 2020, the initial stages of the covid pandemic.