RBI Monetary Policy: Repo rate unchanged at 4% unanimously, inflation to hit 5.7%, says RBI Governor
The central bank governor said that the MPC had voted unanimously to maintain the accommodative stance and added that the reverse repo rate too was kept unchanged at 3.35 per cent.
FollowThe Reserve Bank of India (RBI) on Friday kept the Monetary Policy Committee (MPC) repo rate unchanged at 4 per cent for the eleventh consecutive time. This was the first monetary policy announcement in the new financial year that commenced on April 1 while maintaining an ‘accommodative stance’ as long as necessary, RBI Governor Shaktikanta Das announced on Friday.
The central bank governor said that the MPC had voted unanimously to maintain the accommodative stance and added that the reverse repo rate too was kept unchanged at 3.35 per cent.
The interest rate or repo rate is the rate that the RBI charges when commercial banks borrow money from the country's central bank. The reverse repo rate is that charge that the RBI pays to commercial banks. Both are considered as benchmark interest rates in the country's economy.
“MPC voted unanimously to leave the repo rate unchanged at 4 percent. MPC also voted unanimously to keep stance accommodative. Reverse repo rate hiked to ensure liquidity. RBI to restore liquidity adjustment facility (LAF) corridor to 50 bps, as it was pre-Covid. MSF Rate and Bank Rate remain unchanged at 4.25 per cent,” RBI Governor Shaktikanta Das said.
The government 10-year bond yield hit 7 per cent, first time since June 2019, after the Reserve Bank of India raised its annual inflation forecast. The bond yield hit a high of 7.007 per cent -- a level last seen on 13 June 2019 -- up 9 basis points from its previous close of 6.913 per cent. Bond yields and prices move in opposite directions.
The Reserve Bank of India has increased its annual inflation forecast to 5.7 per cent from 4.5 per cent earlier. The RBI also reduced interest rate corridor to 50 basis points. It lowered growth projection to 7.2 per cent from 7.8 per cent earlier. On record borrowing plans this fiscal year, RBI said it will use various instruments to complete government borrowings.
Cardless cash withdrawal to be made available at all bank branch and ATMs via UPI, to prevent frauds. To secure payment systems, propose guidelines for such operators.
SDF, MSF will be available from 5:30 pm till midnight all days of the week. Money market opening time restore to 9:00 am, which is the pre-pandemic time. Gradual, calibrated withdrawal of liquidity over multi-year time frame, in a non-disruptive manner beginning this year, RBI Governor Shaktikanta Das said.
Will deploy various instruments as warranted to help the government complete its FY23 market borrowing programme. RBI expects CAD to stay at sustainable levels which can be financed with normal capital flows. Remain committed to maintaining orderly conditions in domestic financial markets, Das added.
