Monetary Policy Committee maintains Repo rate at 6.5 percent

Tags: Economy/Finance National News

The six-member Monetary Policy Committee, headed by RBI Governor Shaktikanta Das, announced the status quo on policy rates on 6 April.

An overview of the news

• The Reserve Bank of India announced its bi-monthly monetary policy and kept the repo rate unchanged at 6.50 per cent.

• In the MPC meeting held in February, the repo rate was increased by 0.25 percent to 6.50 percent.

• At that time, RBI had said that the key policy rate had been increased by 0.25 per cent to keep retail inflation under control and maintain a high growth rate.

• The Standing Deposit Facility (SDF) rate will remain unchanged at 6.25 per cent and the Marginal Standing Facility (MSF) rate and the Bank Rate at 6.75 per cent.

• In the financial year 2023, there has been an increase of 6 percent in the production of food grains in the country.

• According to RBI, there is an estimate of reduction in inflation in the financial year 2024.

• GDP growth in FY2024 could be 6.5%. The current account deficit stood at 2.7% of GDP in the October-December quarter of FY23.

What is the repo rate?

• Repo rate is the rate at which the central bank of a country (RBI in India's case) lends money to commercial banks when they are short of funds. Here the central bank buys securities.

What is the Monetary Policy Committee? 

• Under Section 45ZB of the amended RBI Act 1934, the Central government is empowered to constitute a six-member Monetary Policy Committee (MPC) to determine the policy interest rate required to achieve the inflation target. 

• The first such MPC was constituted on September 29, 2016.

• As per the RBI Act, the MPC must meet a minimum of four times in a year.

• The next meeting of the Monetary Policy Committee will be held from 6 to 8 June 2023.