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On 2 and May 4, RBI held an off-cycle meeting of RBI’s Monetary Policy Committee. Monetary Policy Committee is responsible for fixing the benchmark interest rate in India. The committee comprises six members - three officials of the Reserve Bank of India and three external members nominated by the Government of India. The Governor of Reserve Bank of India is the chairperson ex officio of the committee. Following are the highlights of the decisions taken in the off-cycle meeting of RBI's Monetary Policy Committee: · The benchmark policy rate (repo) is hiked by 40 bps to 4.40 per cent with immediate effect. · First hike in policy rate since August 2018 to increase the cost of borrowing for corporates, and individuals. · Cash reserve ratio hiked by 50 bps to 4.5 per cent effective May 21. · MPC held an off-cycle meeting on May 2 & 4 to reassess evolving inflation-growth dynamics. · RBI also decides to remain accommodative while focusing on withdrawal of accommodation to ensure inflation remains within target going forward. · Global commodity price dynamics driving the path of food inflation in India. · Inflation is expected to rule at elevated levels, warranting resolute and calibrated steps to anchor inflation expectations and contain second-round effects. · Renewed lockdowns & supply chain disruptions due to the resurgence of Covid-19 infections in major economies could sustain higher logistics costs for longer. · Indian economy appears capable of weathering deterioration in geopolitical conditions. · A jump in fertilizer prices and other input costs has a direct impact on food prices in India. · Spillovers from global wheat shortages impact domestic prices, even though domestic supply remains comfortable. · The next meeting of the MPC is scheduled during June 6-8, 2022