Timing of RBI rate hike a surprise for FM!

Mumbai: The Reserve Bank of India's (RBI) move to raise key lending rate is part of synchronised action by central banks globally and had come as a surprise only because it was done between two monetary policy reviews, says Union Finance Minister Nirmala Sitharaman.

"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," she said at an event in Mumbai late on Saturday.

"It came as a surprise because it came between two monetary policy reviews." The Finance Minister, who received an award at the event for her handling of the country's economy through the pandemic, noted that the RBI had in its April policy review indicated that it was time to act on inflation. The minister stressed that she doesn't see the central bank's move affecting the government's infrastructure investment.

The RBI on Wednesday raised its key lending rate by 40 basis points to 4.40 per cent. It also hiked the cash reserve ratio by 50 basis points. The central bank pointed to rising inflation, geo-political tensions, high crude oil prices and global shortage of commodities as the reasons that led to the move.