RBI Monetary Policy Announcement
RBI Governor Shaktikanta Das announced the second monetary policy of this financial year on 8 June. There has been no change in the repo rate for the second time in a row.
An overview of the news
After the meeting of the Monetary Policy Committee, the RBI announced the monetary policy, saying that the repo rate would remain unchanged at 6.5%.
Consumer Price Inflation eased but remains above the target.
Continued efforts to manage liquidity and currency circulation.
The current account deficit is expected to narrow further in the fourth quarter.
Net inflows into non-resident deposits increased to US$ 8 billion in FY23 from US$ 3.2 billion in the previous year.
The Indian Rupee has remained stable since January this year. Conditions are favorable to accelerate capital expenditure.
Monetary Policy Committee's Decision
Policy repo rate remains unchanged at 6.5%.
Standing Deposit Facility (SDF rate) remains at 6.25%.
Marginal Standing Facilityand bank rates stand at 6.75%.
Inflation Trends in India
Consumer Price Inflation eased during March-April 2023.
Inflation moved into the tolerance band, declining from 6.7% in 2022-23.
Headline inflation remains above the target and is expected to continue in 2023-24.
Projected CPI headline inflation for 2023-24 is 5.1%, assuming a normal monsoon.
Withdrawal of Rs 2000 Note
Decline in currency circulation and increased government spending.
System liquidity expansion due to RBI's market operations.
Deposit of Rs 2000 banknotes in banks further augmented liquidity.
So far ₹1.8 lakh crore worth ₹2,000 banknotes have come back after the central bank announced to take these out of circulation.
This is 50% of the total ₹3.62 lakh crore-worth notes in circulation as of March 31.
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 meeting of the Monetary Policy Committee was held from 6 to 8 June 2023.
Please Rate this article, so that we can improve the quality for you -