Let us tell you that the Reserve Bank started the process of increasing the repo rate in May 2022 in the changed circumstances after the outbreak of war between Russia and Ukraine last year. This trend of increasing the policy interest rate continued till February 2023. During this period, the repo rate increased from four per cent to 6.5 per cent.
RBI [Reserve Bank Of India]; For the fourth consecutive time, RBI has not changed the repo rate. That too when the retail inflation rate is outside the RBI target. This decision of RBI has brought great relief to all types of loan takers including home, car etc. Let us tell you that the retail inflation rate in August was 6.83%. This is outside the RBI’s target of keeping the inflation rate in the range of 2 to 6 percent. Let us tell you that the Reserve Bank had started the process of increasing the repo rate in May 2022 in the changed circumstances after the outbreak of war between Russia and Ukraine last year. This trend of increasing the policy interest rate continued till February 2023. During this period, the repo rate increased from four percent to 6.50 percent. However, since then the MPC, the highest monetary policy making body of RBI, has not made any change in the repo rate. In the last three bi-monthly meetings, the MPC has maintained the repo rate at 6.50 percent.
Important points of RBI policy
- The domestic economy remains resilient due to strong demand.
- Inflation rate will moderate slightly in September. That means inflation will decrease.
- The Monetary Committee has maintained its stance of withdrawing the accommodative stance.
- MPC ready to take necessary steps based on inflation.
- The production of capital goods indicates that private sector investment is increasing.
- The full benefit of the 2.5 percent cut in repo rate has not yet reached the consumers.
- The Reserve Bank maintained the growth estimate of 6.5 percent for the current financial year.
- The central bank estimates that retail inflation will be 5.4 percent in 2023-24.
- Inflation will moderate in the near future due to reduction in the prices of vegetables and reduction in the price of LPG cylinders.
- Retail inflation expected to come in at 5.2 percent next year.
- There will be no sustained decline in food inflation in the third quarter.
- Monetary policy should be fully prepared to deal with sudden increases in food and fuel prices.
- The Indian banking system remains strong with asset quality improving.
People will get relief from inflation
Announcing the RBI monetary policy, RBI Governor Shaktikanta Das said that the prices of vegetables have come down. Its effect will be visible on the inflation rate for the month of September. Inflation rate will decrease. He said that high inflation rate is a threat to the Indian economy. He said that all the members involved in monetary policy voted in favor of keeping the repo rate stable. The Governor said that the target of RBI is to bring the inflation rate to 4 percent. We are moving forward with that goal. However, we are continuously trying to reduce inflation gradually in sync with development.
GDP growth will be 6.5 percent
While announcing the monetary policy, the RBI Governor said that despite global challenges, the Indian economy will grow at the rate of 6.5 percent in the current financial year. RBI has maintained the GDP growth rate. The GDP rate has been maintained at 6 percent in the third quarter of the current financial year.
Indian banking system strong
Announcing the monetary policy, Das said that the Indian banking system remains strong. RBI said that the share of personal loans has increased rapidly. RBI is keeping an eye on this. RBI is closely monitoring the global economy. He said that core inflation has come down. This is important for price stability.
What is repo rate?
Repo rate is the interest rate at which commercial banks take loans from the central bank to meet their immediate needs. RBI uses it to control inflation. At the same time, the MPC has maintained its stance of withdrawing the liberal stance. Das said that India remains the engine of economic growth for the world, but there is no scope for complacency. MPC will take necessary steps regarding inflation. RBI had also not changed the repo rate in the previous monetary policy review meetings in August, June and April. Earlier, the repo rate was increased by 2.50 percent a total of six times since May last year, mainly to control inflation.
![shaktiglobalnews.com](https://secure.gravatar.com/avatar/e830a743385767645ff8f33366759e98?s=96&r=g&d=https://shaktiglobalnews.com/wp-content/plugins/userswp/assets/images/no_profile.png)