RBI Monetary Policy Committee meeting: The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) increased the policy rate by 50 basis points today in an effort to further control inflation. On the other hand, The fourth rate increase in a row comes amid escalating concerns about a global economic downturn, rising inflation, and a decline in the value of the Indian rupee and bond markets. The central bank is working very hard to sustain a delicate balance between supporting the emerging economic growth recovery on the one hand and controlling inflation on the other.
Today’s Repo Rate increase by the RBI’s Monetary Policy Committee is 50 basis points. Repo Rate increased by 190 basis points (bps) in the previous five months (it was 4% in April and is currently 5.90%).
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Meanwhile, since May, the central bank has raised the repo rate three times, bringing it to its present level of 5.40 percent. The repo rate will rise by another 50 basis points to 5.90% if that happens.
RBI Governor Shaktikanta Das announces that RBI “increases the policy repo rate by 50 basis points to 5.9% with immediate effect.” pic.twitter.com/YpDjOVsgus
— ANI (@ANI) September 30, 2022
Retail inflation, which increased from 6.71 percent in July to 7.01 percent in August, was taken into consideration when determining the rate increase. To put things in perspective, the MPC’s inflation target is 4% with a 6% upper tolerance band.
The following are the main takeaways from today’s Monetary Policy Committee meeting at the RBI:
1. Revision of Policy Rates
2. The repo rate is raised by the RBI by 50 basis points to 5.9%.
3. The Repo Rate has already gone up by 190 basis points (bps) in the last five months (it was 4% in April and is now 5.90%).
4. The Standing Deposit Facility (SDF) rate is now 5.65%.
5. In order to ensure that inflation stays within target moving forward and supports growth, the MPC decided to maintain its focus on the withdrawal of accommodation: RBI
6. In order to counteract a temporary moderation in liquidity, the 14-day and 28-day variable rate reverse repo rate (VRRR) auctions were combined.
7. In order to balance out the system’s excess liquidity, the Reserve Bank conducts VRRR auctions with longer maturities.
Home, loan, personal, auto, and other loans will cost more as the repo rate rises.
