Monetary Policy Committee maintains Repo rate at 6.5 percent
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.
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