Statement of RBI MPC Meeting held today: Repo rate remains unchanged

“The Monetary Policy Committee held on Thursday (August 8) decided by a 4:2 majority to keep the policy repo rate unchanged at 6.5%. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. “These decisions are in consonance to achieve the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth,” it said.

Consequently, the standing deposit facility (SDF) rate remains at 6.25%, and the marginal standing facility (MSF) rate and the bank rate are at 6.75%.The committee Keeps the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.

Presenting the third monetary policy statement of FY24-25, the RBI Governor said that ensuring price stability eventually results in and supports a period of sustained growth. He said, “We have decided to focus on inflation and support price stability to ensure growth.”

The current reserve ratios and key policy rates which remain unchanged are as follows.

*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. However, 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.