The Reserve Bank of India has not changed repo rate for the fifth consecutive time.
Digital News Guru Delhi Desk: For the fifth consecutive time, the Monetary Policy Committee (MPC) of the Reserve Bank of India has not changed the repo rate which is at 6.50 percent, as statement issued by the Governor of the Reserve Bank of India, Shaktikanta Das, on the Friday and the decision was taken by the majority of the Monetary Policy Committee of the RBI on Wednesday.
The Reserve Bank of India, in their Monetary Policy, has increased the growth projection from 6.5 percent to 7 percent for the current financial year 2023–24, as added by the Governor of the RBI in the statement. The GDP (gross domestic product) has also raised to 7.6 percent in the July–September quarter of the current financial year 2023–24, becoming the fastest-growing economy.
Shaktikanta Das also said that the rate of the ‘standing deposit facility’ (SDF) remains at 6.25 percent and the rate of ‘Marginal Deposit Facility’ along with ‘Bank Rate’ remains at 6.75 percent. The repo rate increased by 250 basis points (bps) in May 2022.
Why the repo rate has not been changed by the RBI
First of all, the repo rate is the rate at which the Reserve Bank of India lends money to other banks to meet out their needs.
For the fifth consecutive time, the repo rate has not changed by the Monetary Policy Committee of the RBI, which remains at 6.50 percent, and this repo rate remains unchanged because we are already seeing the inflation due to the price hikes of vegetables, so to make the balance between the controlling inflation and the growth of the economy, the repo rate has not changed and the repo rate is used by the authorities of monetary policy to control the inflation because it is a major concern, for now.
About the Monetary Policy Committee
The Monetary Policy Committee was founded in 2016 under the RBI Act of 1934, as per Section 45ZB in Mumbai and the idea of its formation was first proposed by the Urijit Patel Committee . The Monetary Policy committee is responsible for fixing the benchmark interest rate in India. The Committee consists of six members, of whom three are members of the Reserve Bank of India and the other three are external members nominated by the government of India.
The committee is headed by the Governor of the Reserve Bank of India, who is also the ex officio chairman of the committee. Currently, Shaktikanta Das is the Governor of the Reserve Bank of India and has also served in the Indian Administrative Service (IAS) and in-charge of the monetary policy is Dr. Michael Debabrata Patra.
The Monetary Policy is the policy of the central bank with regard to the use of monetary instrument which manages the inflation rate and money supply. The prime objective of the policy is to maintain the price stability along with growth.
The Monetary Policy Committee have decided to continue the stance “withdrawal of accomodation”. The meaning of “accommodative stance” by the central bank to prepare for the supply of money so it can boost the economy. While ‘withdrawal of accomodation’ means to cut the supply of money to control the inflation.
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