RBI Monetary Policy: Repo rate hiked by 35 bps to 6.25%

RBI Monetary Policy Rates Changes: The Monetary Policy Committee (on 7 December 2022) decided to keep its withdrawal of accommodation stance to ensure that inflation remains within the target going forward while supporting growth. In line with that-

• There is an increase in the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points to 6.25 percent with immediate effect.
• Consequently, the standing deposit facility (SDF) rate stands adjusted to 6.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent.

These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 % within a band of +/- 2% while supporting growth.

Monetary Policy Rates as on date 7 December 2022

NOTE: Repo rate increase by 35 basis point to 6.25%.

Other Important points

1. Gross domestic product (GDP) increased by 6.3 per cent year-on-year (y-o-y) in Q2:2022-23 after an increase of 13.5 per cent in Q1. On the supply side, gross value added (GVA) rose by 5.6 per cent in Q2. Forcast for FY23 : 6.8% decreased from 7%.
2. The overall liquidity remains in surplus, with average daily absorption under the liquidity adjustment facility (LAF) at ₹1.4 lakh crore during October-November as compared with ₹2.2 lakh crore in August-September. On a y-o-y basis, money supply (M3) expanded by 8.9 per cent as on November 18, 2022 while bank credit rose by 17.2 per cent. India’s foreign exchange reserves were placed at US$ 561.2 billion as on December 2, 2022.
3. The central bank maintained its 6.7% inflation forecast

Current members of Monetary Policy Committee:

1. Shaktikanta Das (Governor of RBI) 
2. Dr. Michael Debabrata Patra (Deputy Governor of RBI),
3. Dr. Rajiv Ranjan (Executive Director)
4. Prof. Jayanth R. Varma (IIM Ahemdabad)
5. Dr. Ashima Goyal  (Indira Gandhi Institute of Development Research, Mumbai)
6. Dr. Shashanka Bhide senior advisor at the New Delhi-based think tank National Council for Applied Economic Research
   

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