According to RBI Governor, the policy rate has not changed despite accounting for inflation.

Five out of six members voted to raise the policy repo rate by 35 basis points to 6.25 percent . The MPC decided to raise the rate and to remain focused on the elimination of accommodation while also supporting economic development .

India : RBI Governor Shaktikanta Das said at the final meeting of the Monetary Policy Committee (MPC) on Wednesday that five out of six members voted to raise the policy repo rate by 35 basis points to 6.25 percent, with immediate effect.In other words, the marginal standing facility (MSF) rate and the bank rate were changed to 6.50 percent.The policy rate remains accommodative when adjusted for inflation, and a majority of four out of six members of the MPC voted to keep its emphasis on housing withdrawal to ensure that inflation remains within the target while still supporting economic development.The Governor explained the MPCs' reasoning and position.Economic prospects are also stifled around the world, he said, adding that financial markets are still volatile and price swings are contributing to the Indian economy's improved prospects.

As predicted, consumer price inflation decreased to 6.8 percent (y-o-y) in October, but it still falls below the target's upper tolerance range.Core inflation is showing stickiness, according to the MPC.On balance, he said that further calibrated quantitative policy intervention was needed to hold inflation expectations steady, keep inflation expectations stable, and minimize second-round effects.These initiatives will improve the Indian economy's medium-term growth prospects.

According to the Governor, inflation is projected to rise above the 4% target over the next 12 months.In November 2022, the system's liquidity is expected to grow by around Rs 1.6 lakh crore per day as a result of the liquidity adjustment facility (LAF).According to him, it has risen to Rs 2.6 lakh crore as of December 5th.The MPC continued to remain focused on the demise of accommodation, according to the most recent estimates published by the National Statistical Office (NSO), with the overall economic and liquidity conditions remaining stable.

Going forward, investment spending would be backed by government capex.According to surveys, consumer confidence has increased even higher in the first half of the year (H1).The business outlook is favorable for the manufacturing and infrastructure industries.Business in the services sector also expects to grow.

In his summary, the Governor said that the greatest challenges to the outlook are continuing to be the backlash from long-running geopolitical uncertainties, a global recession, and tightening of global financial conditions, but that the fight against inflation is not over, and that added pressure points from high and sticky core inflation, as well as exposure of food inflation to international forces and weather-related events, do remain.We will be agile and in the best interest of the economy.The importance of development should be kept in mind, he said.An accommodative approach means that the central bank is able to expand the money supply to support economic development.During the COVID-19 crisis, the RBI has taken an accommodating attitude for the past two years to assist the economy.

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