EXPLAINER
The story so far: On May 4, the Reserve Bank of India, in a surprise move, announced that the bank’s Monetary Policy Committee (MPC) had held an ‘off-cycle’ meeting at which it had decided unanimously to raise the “policy repo rate by 40 basis points to 4.40%, with immediate effect”. Citing ‘inflation that was rising alarmingly and spreading fast’ globally, amid geopolitical tensions, RBI Governor Shaktikanta Das said that the MPC had judged that the ‘inflation outlook warranted an appropriate and timely response through resolute and calibrated steps to ensure that the second-round effects of supply side shocks on the economy were contained and long-term inflation expectations were kept firmly anchored’. Mr. Das added that the RBI’s monetary policy response would help preserve macro-financial stability amid increasing volatility in financial markets.
