New Delhi: The Reserve Bank of India (RBI) has once again given importance to inflation instead of growth and has not made any change in the repo rate.
This is the 9th consecutive time that the Monetary Policy Committee (MPC) of the Reserve Bank has not made any change in the repo rate. The repo rate remains at 6.5 percent as before. Along with this, the MPC has also maintained its stance of ‘withdrawing the liberal stance’.
Today was the last day of the RBI Monetary Policy Committee meeting, which started on August 6 under the chairmanship of Reserve Bank of India Governor Shaktikanta Das. After the meeting ended, the governor announced the decisions of the committee. 4 out of 6 members of the RBI Monetary Policy Committee (MPC) decided in favor of not changing the rates.
RBI Governor Shaktikanta Das said that price stability is necessary for sustainable development. Apart from the repo rate, it has been announced to keep MSF, reverse repo rate and bank rate stable.
The last change was made in February 2023
The Reserve Bank of India (RBI) last changed the repo rate in the month of February 2023 and increased it. The repo rate has remained at 6.5 percent since February 2023. The current MSF is 6.75 percent, reverse repo rate is 3.35 percent and bank rate is 6.75 percent. Shaktikanta Das said that the Reserve Bank of India is trying to achieve the inflation rate target of 4 percent. He said that the current global growth scenario looks positive, but the medium-term global growth scenario looks challenging.
What is repo rate?
Repo Rate is the rate at which any bank borrows from RBI to meet its expenses. RBI uses it to control inflation. This means that the repo rate is directly linked to the cost of funds for banks. When the repo rate is low, the cost for banks is reduced and when the repo rate increases, the funds become expensive for them.
On this basis, the interest rates of loans given by banks to the common people like home loans, personal loans, vehicle loans etc. are fixed according to the repo rate. All these loans become cheaper due to the reduction in the repo rate. Keeping the repo rate at 6.5 percent means that there will be no change in the EMI installment of home loans, personal loans, vehicle loans etc.
Inflation rate at high level
It is noteworthy that the retail inflation rate rose to 5.08 percent in June. This is the highest level of retail inflation in 4 months. At the same time, the wholesale inflation rate in June was at a 16-month high of 3.36 percent. Voice of Banking founder Ashwini Rana said on the RBI’s decision that bank customers waiting for a cut in the repo rate have been disappointed. He has expressed hope that if the Reserve Bank feels that inflation has come under control then the repo rate can be reduced in the next MPC meeting.
