Defying expert expectations, the six-member monetary policy committee headed by RBI Governor Shaktikanta Das today announced a status quo on policy rates. While announcing the first bi-monthly monetary policy statement for 2023-24, Mr. Das said the monetary policy committee has unanimously decided to keep the repo rate unchanged at 6.5 percent. However, the RBI would be ready to act should the situation warrant. Consequently, the standing deposit facility SDF rate will remain stable at 6.25 percent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 percent.
Repo rate is the rate at which RBI lends to banks generally against government securities while the reverse repo is the rate at which RBI borrows money from the banks. Both these rates are key determinants for customers availing loans from banks. A pause in the rate hike comes after six successive rate hikes. In its last monetary policy review announced in February 2023, RBI raised the repo rate by 25 basis points to 6.50 percent. The repo rate has seen an increase of 250 basis points since May last year, primarily to contain inflation.
RBI has projected GDP growth for 2023-24 at 6.5 percent with risks evenly balanced and inflation to moderate to 5.2 percent. The next meeting of the Monetary Policy Committee would be held from the 6th to 8th of June 2023.
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