The Reserve Bank of India (RBI) on Wednesday increased the repo rate by 0.50 percent to 4.90 percent to control inflation. At the same time, the Reserve Bank has retained the economic growth forecast for the current financial year 2022-23 at 7.2 percent. RBI Governor Shaktikanta Das gave this information after the meeting of the Monetary Policy Committee on Wednesday. Earlier on May 4, RBI had suddenly increased the key policy rate by 0.4 percent.
The RBI governor informed about the decision after a three-day meeting of the committee. He said that by consensus it has been decided to increase the policy rate by 0.50 percent. The economic growth forecast for the current fiscal year 2022-23 has been retained at 7.2 per cent. Inflation in the first three quarters of the current financial year is expected to be above 6 per cent at 6.7 per cent.
Shaktikanta Das said that in the meeting a decision has been taken to increase the Standing Deposit Facility (SDF) by 0.50 percent. After this hike, the SDF has now increased from 4.15 per cent to 4.65 per cent. Similarly, the Marginal Standing Facility (MSF) has also been increased by 0.50 per cent, from 4.65 per cent to 5.15 per cent.
what is repo rate
Repo rate is the rate at which RBI lends to banks. Banks give loans to customers from this loan. In such a situation, a lower repo rate means that many types of loans from the bank will become cheaper, whereas the reverse repo rate is the exact opposite of the repo rate.
It is noteworthy that the RBI had taken everyone by surprise last month with a sudden increase in the repo rate and cash reserve ratio (CRR). The Reserve Bank had increased the repo rate by 0.40 percent to 4.40 percent, while the CRR was increased by 0.50 percent to 4.5 percent.