The Monetary Policy Committee (MPC) convened on August 4th, 5th, and 6th to deliberate on the prevailing macroeconomic and financial conditions and to decide on the policy repo rate.
Following a comprehensive assessment of the evolving economic landscape and future outlook, the MPC unanimously voted to maintain the status quo on key policy rates. Accordingly:
* The policy repo rate under the Liquidity Adjustment Facility (LAF) remains unchanged at 5.50 per cent
* The **Standing Deposit Facility (SDF)** rate remains at 5.25 per cent.
* The Marginal Standing Facility (MSF) rate and the **Bank Rate** continue at 5.75 per cent
In addition, the MPC resolved to maintain a **neutral policy stance**, allowing for flexibility in response to future developments.
The Committee observed that while **headline inflation** has moderated significantly compared to earlier projections, this decline is largely attributable to **volatile food prices**, particularly vegetables. In contrast, **core inflation**—which excludes food and fuel—has remained stable around the **4 per cent** level, in line with expectations.
Look at unchanged Key Policy Rates
| CRR | 3.00% |
| SLR | 18% |
| Repo rate | 5.50% |
| SDF* | 5.25% |
| Reverse repo rate | 3.35% |
| Bank Rate | 5.75% |
| MSF Rate (Marginal Standing Facility Rate) | 5.75% |
*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, 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.
