The six-member Monetary Policy Committee (MPC) headed by RBI Governor on Thursday (June 8, 2023) decided to keep the policy repo rate unchanged at 6.50% and the Standing Deposit Facility (SDF) rate has been pegged at 6.25 per cent. The central bank kept bank rates at 6.75 per cent. He added that the MPC unanimously agreed to the withdrawal of the accommodative stance to tackle inflation. Meanwhile, the RBI also lowered its retail inflation projections for FY 24 from 5.2 per cent to 5.1 per cent. The RBI’s Monetary Policy Committee (MPC) anticipates that growth will fluctuate throughout the year, with an expected surge to 8% in the first quarter before tapering off to 5.7% by the final quarter. These projections suggest a robust start to the fiscal year followed by a gradual slowdown. RBI Governor Shaktikanta Das said that headline CPI inflation is expected to remain above 4%.’
The current reserve ratios and revised policy rates are as under.
| CRR (Cash Reserve Ratio) | 4.50% |
| SLR (Statutory Liquidity Ratio) | 18.00 % |
| Repo Rate | 6.50% |
| Standing Deposit facility (SDF)* | 6.25% |
| Reverse Repo Rate | 3.35% |
| Bank Rate | 6.75% |
| MSF Rate (Marginal Standing Facility Rate) | 6.75% |
*SDF is the new floor for policy rates introduced by RBI in April 2022, as a mechanism to curb inflation by absorbing liquidity. The SDF rate is applied for which banks park their excess funds with the RBI without any collateral. Although, the earlier system of reverse repo rate will remain as part of RBI’s toolkit and its operation will be at the discretion of the RBI for purposes specified from time to time, according to RBI’s announcement. This move of RBI makes the reverse repo rate redundant for now.
