Repo Rates Hike: Finance Minister Nirmala Sitharaman has said that the recent decision to hike policy rates by the Reserve Bank of India is not, but the timing of this decision is surprising. Along with this, he has expressed confidence that due to the increase in the cost of funds, the planned infrastructure investment of the government will not be affected.
Rates increased on May 4
The Reserve Bank of India has increased the repo rate by 0.4 per cent on May 4, after which it has increased to 4.40 per cent. Apart from this, the CRR has also been increased by 0.50 percent to 4.5 percent. The Reserve Bank has cited increased inflationary pressures after the Ukraine war and the rise in crude oil prices for the hike in policy rates.
sudden hike in rates
Sitharaman gave her opinion on the decision to increase rates in a program. He said, “The central bank suddenly increased the rates, due to which everyone was shocked. People were thinking that this work should have been done somehow. Let us tell you that it was surprising because this decision was taken in the middle of two meetings of the Monetary Policy Committee (MPC).
All central banks are increasing rates
He said that in the last MPC meeting held in early April, the Reserve Bank had indicated that it was time for them to act as well. After this increase, rates are also being increased by the major central banks of the world.
Know what the Finance Minister said?
The Finance Minister said that in a way this was a step taken in coordination. Australia did so and the US also increased rates on the same day. So I see more understanding among central banks these days, but the understanding of how to recover from the pandemic is not entirely exclusive to India.
cheap crude oil
On the economic sanctions imposed on Russia after the attack on Ukraine, he said that countries buying crude oil from Russia started turning to countries from which India has been buying oil. Due to this, India’s expenditure on crude oil imports is expected to increase significantly. Along with this, he said that India will continue to buy crude oil from wherever it is available cheaply.