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Repo Rate Increased

Repo Rate Increased:

The Reserve Bank of India (RBI) raised the repo rate by 40 basis points (bps) to 4.4% citing inflation that was globally “rising alarmingly and spreading fast”.

  • Monetary Policy Committee (MPC) had in an off-cycle meeting reviewed the latest economic developments including the impact of the war in Ukraine and decided to increase the policy interest rates in a bid to curb accelerating inflation.
  • The MPC, however, retained its ‘accommodative’ policy stance even as it focuses on withdrawal of accommodation to keep inflation within the target range while supporting growth.
  • As part of the withdrawal of accommodation, the RBI also raised the Cash Reserve Ratio (CRR) by 50 basis points to 4.5% with effect from May 21 so as to drain surplus liquidity of about ₹87,000 crore.
  • As part of the increases, the standing deposit facility (SDF) rate would become 4.15% and the marginal standing facility (MSF) and bank rate would be 4.65%.
  • 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%.

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