RBI hikes Repo Rate, raises Inflation Forecast

Current Context: Reserve Bank of India (RBI) has increased the repo rate by 50 bps to 4.90%.

• As per the RBI governor, the rate hike has happened to contain the soaring inflation.
• It has also been stated that as of June 2022 India's forex reserves stood at $601.1.
• The limit for e-mandates on cards and Prepaid Payment Instruments (PPIs) has increased from Rs 5,000 to Rs 15,000.
• Besides all the Credit cards, starting with RuPay credit cards can be linked to the UPI platforms.
• It has also hiked the limit of individual loans extended by cooperative banks by 100%.
• CPI inflation forecast for FY23 has increased to 6.7% from 5.7%. earlier.
• The GDP forecast for FY23 was maintained at 7.2%.
• Both Marginal Standing Facility Rate & Bank rate has increased to 5.15% from 4.65% earlier.

Question:

Q.1 Consider the following statements regarding the Repo rate.
A. Repo rate is the rate at which the central bank of lends money to commercial banks in the event of any shortfall of funds.
B.As per the Third monetary policy of RBI's repo rate is maintained at 4.90%.

Select the option given below
a. Only A
b. Both A & B
c. Only B
d. None of the above