The six-member Monetary Policy Committee (MPC) headed by RBI Governor on Wednesday (February 8, 2023) announced the hike in the repo rate by 25 basis points to 6.50%. The RBI also projected India’s GDP growth at 6.4 per cent for 2023-24 and projected retail inflation at 6.5 per cent for 2022-23 and 5.3 per cent for the next fiscal.
Rate hike of 25 basis points is considered appropriate at this juncture. Monetary policy will remain agile and alert to inflation,” Das said during a press conference. The RBI governor noted that the world economy is not looking so grim anymore and that inflation also appears to be coming down. “RBI’s MPC decided 4:2 vote to remain focused on withdrawal of accommodative policy,” he said.
The revised policy rates are as under.
|CRR (Cash Reserve Ratio)||4.50%|
|SLR (Statutory Liquidity Ratio)||18.00 %|
|Standing Deposit facility (SDF)||6.00%|
|Reverse Repo Rate*||3.35%*|
|MSF Rate (Marginal Standing Facility Rate)||6.50%|
*SDF is the new floor for policy rates introduced by RBI. 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.