Repo rate and other key policy rates remain unchanged

The Monetary Policy Committee (MPC) met on the 4^th, 5^th, and 6^th of October 2023 and decided to keep the policy repo rate at 6.50 per cent, and other key policy rates also remain unchanged.

RBI also maintained the status quo on the ‘withdrawal of accommodation’ policy stance. Withdrawal of accommodation refers to a policy of reducing the money supply in the system. This is done to control inflation while supporting growth.

“These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent,” said RBI.

Increase of monetary ceiling of gold loans under bullet repayment scheme:

“UCBs have been permitted an extended glide path for achievement of PSL targets, beyond March 2023. With a view to incentivising UCBs that have met the prescribed PSL targets as on March 31, 2023, it has been decided to increase the monetary ceiling of gold loans that can be granted under the bullet repayment scheme from ₹2.00 lakh to ₹4.00 lakh for such UCBs who have met the overall PSL target and sub-targets as on March 31, 2023. These banks will be required to continue to meet the targets and sub-targets thereafter. Detailed guidelines on the matter will be issued separately”, the statement said.

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

*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.

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