RBI's move raising policy rate a synchronised action: Nirmala Sitaraman

New Delhi: Union Finance Minister Nirmal Sithraman said on Sunday that the Reserve Bank of India's (RBI) move to raise the policy rate is part of a synchronised action by the central banks. She added that it appeared sudden because it was done between two monetary reviews only, IANS reported.

Addressing the Economic Times Awards for Corporate Excellence in Mumbai, she said, "It is the timing which came as a surprise to many, but the act, people thought, should have been done anyway - to what extent could have varied."

"It came as a surprise because it came between two monetary policy reviews," she said.

On Wednesday, Reserve Bank of India Governor Shaktikanta Das had announced that the Monetary Policy Committee (MPC) of the central bank hiked the repo rate by 40 basis points (bps) to 4.40 per cent with immediate effect. This was done in an off-cycle meeting, he had said.

The Repo rate is the rate at which RBI lends short-term funds to banks. RBI had slashed the repo rate by 250 basis points to help revive the growth momentum since February 2019. The Monetary Policy

The committee has been on a prolonged accommodative stance to support growth, IANS reports.

RBI also hiked the case reserve ratio by 50 basis points to 4.5 per cent. The bank said that the move was made to counter inflation.