The comments by the finance minister came a day after RBI hiked interest rate by 50 basis points in a bid to bring inflation to its comfort zone and in line with aggressive policy tightening by key global central banks.
The third straight hike took the overall increase in the federal fund rates by 190 bps to 5.90 per cent – the highest since April 2019. The MPC-RBI also lowered the growth forecast for the second time to 7 per cent – down from 7.8 per cent in April and 7.2 per cent in August.
RBI is mandated to keep retail inflation at 4 per cent with a margin of 2 per cent on either side. Inflation has remained above RBI’s upper tolerance level of 6 per cent since January 2022.
India’s retail inflation surged to 7 per cent annually in August from 6.71 per cent in July 2022. The number has remained above RBI’s tolerance band of 2-6 per cent for the eighth consecutive month.
Speaking at the annual day function of regulator IBBI, Sitharaman said: “We are in an era of robust economic activities”.
