The Reserve Bank of India has once again retained its repo rate of 6.50 per cent, retaining the status quo. The central bank has resorted to sustaining the same rate for the ninth straight time. This was announced by the government's banker after a 2-day Monetary Policy Committee meeting, that concluded on August 7.
RBI Maintains Repo Rate 6.50%
The governor, in his address, started by addressing the need for economic paradigms to remain vigilant in an uncertain global environment. He also emphasised inflation, although he claimed the rubric to be in control.
The MPC came to this decision with a 4-2 majority of the committee. The rate has remained at 6.50 per cent since February 2023.
The MSF or Marginal Standing Facility remained at 6.75 per cent. The SDF, or Standing Deposit Facility remained at 6.25 per cent.
This MPC meeting started on August 6 and concluded on August 7. These MPC meetings, under the leadership of the RBI governor (currently Shaktikanta Das), ruminate and decide upon the monetary policies for the country every two months. The next MPC is scheduled to happen in August, between October 7 and 9, 2024.
The central bank also retained its GDP growth expectations at 7.2 per cent.
Jerome Powell (seen in the image) led US Federal Reserve has resorted to retaining the interest rates. |
Why Repo Rate Matters
Simply put, a repo rate is the amount at which the central bank lends money to commercial banks.
A repo rate would inevitably result in higher loan interest rates, which would limit your ability to borrow money and the amount of money that is available to the market and the economy as a whole.
The RBI governor is expected to hold a post-meeting presence press conference later on August 8 at around 12:00 IST.
The economic survey for 2023–24 that was released ahead of the budget had predicted that India is expected to grow at 6.5-7 per cent in 2024–25. This is slightly behind the RBI's own estimations and predictions for the fiscal year.
Bank of England also cuts its interest rates after 4 years. | Ray Tang/Xinhua
US Fed Retains Rates
These entities underlined the importance and their expectations of the central bank slashing the repo rate.
The US Federal Reserve has also retained its interest rate between 5.25-5.50 per cent for some time now.
Interestingly, the Bank of Japan recently increased rates, leading to a downturn in stock market developments. In addition, the Bank of England also cuts its interest rates after 4 years. Lowering it from 5.25 per cent to 5.00 per cent.
