RBI Monetary Policy Review: Highlights

The Monetary Policy Committee (MPC) of the RBI announced new rates in the quarterly meeting of June 2022. The members of the MPC voted to increase the rates keeping in mind the economic situation.

What are the new rates?

  • Repo Rate: The repo rate was increased by 50 basis points to 4.90 percent.
  • Reverse Repo Rate: 3.35 percent
  • Marginal Standing Facility: 5.15 percent
  • Bank Rate: 5.15 percent
  • Cash Reserve Ratio: 4.50 percent
  • Statutory Liquidity Ratio (SLR): 18.00 percent
  • Standing Deposit Facility Rate: 4.65 percent

The MPC also remained focused on the withdrawal of accommodation so as to ensure that inflation remains within target, while also supporting growth.

Why were the rates changed?

Since the May 2022 meeting of the MPC, the global economy is struggling with high inflation rates and slowing growth, sanctions and persisting geopolitical tensions, elevated prices of commodities and crude oil, and break in the supply chain due to COVID-19. The financial markets across the globe as well as in India are facing a lot of turbulence amidst growing stagflation concerns. Also, there is a break in supply chains causing skyrocketing prices leading to unstable global financial conditions which is increasing the risks of financial instability and unstable growth outlook.

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