BANKING AND ECONOMY
The Repo Rate inflation was increased by 50 basis points by the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) in its recent meeting.
The Repo Rate was fixed at 4.90% since the inflation is above the central bank’s upper tolerance limit. The country’s central bank has to maintain the inflation rate between 2% and 6%. But the inflation rate exceeds 6%.
As per the MPC’s decision, the Standing Deposit Facility (SDF) rate and Marginal Standing Facility rate (MSFR) stood at 4.65% and 5.15% respectively.
India’s real GDP growth is pegged at 7.2% for 2021-22 and the inflation forecast for 2022-23 stands at 6.7%.
The MPC remains committed to bringing down Consumer Price Inflation (CPI) back to target and has unanimously voted to focus on withdrawal of accommodation. CPI-based inflation had surged to an eight-year high of 7.79% in April 2022.
The Repo Rate is the rate at which a nation's central bank gives money to commercial banks in the time of a cash shortage.
The Monetary Policy Committee (MPC) is a committee constituted by the Central Government and led by the Governor of RBI. Monetary Policy Committee was formed with the mission of fixing the benchmark policy interest rate (repo rate) to restrain inflation within the particular target level.