RBI Monetary Policy 2022: RBI Repo Rate Hike by 35 bps to 6.25%

RBI Monetary Policy 2022: The Monetary Policy Committee (MPC), which consists of six members and is led by Reserve Bank of India (RBI) Governor Shaktikanta Das, has announced its decision.  In the consecutive fifth hike this year, the RBI’s Monetary Policy Committee has raised the repo rate by 35 basis points (bps) to 6.25 per cent with immediate effect, making loans expensive. Since August 2018, the policy rate has now reached its highest level. The RBI has maintained policy stance at ‘withdrawal of accommodation’.

December 2022 Current Affairs Quiz

Notably: The next meeting of the MPC is scheduled during February 6-8, 2023.

RBI Repo Rate: Consequently, the various rates are as under

• Policy Repo Rate: 6.25% (Changed)
• Standing Deposit Facility (SDF): 6.00% (Changed)
• Marginal Standing Facility Rate: 6.50% (Changed)
• Bank Rate: 6.50% (Changed)
• Fixed Reverse Repo Rate: 3.35%
• Cash Reserve Ratio (CRR): 4.50%
• Statutory Liquidity Ratio (SLR): 18.00%

Key Points of the Monetary Policy:

• The Consumer Price Index (CPI) inflation forecast for FY23 remains at 6.7% by the RBI. Forecast for real GDP in FY23 was reduced from 7% to 6.8%.Inflation expected to be above 4% in the next 12 months.
• Standing Deposit Facility rate, Marginal Standing Facility rate also increased by 35 basis points each to 6% and 6.5%
• Retail inflation in India decreased from 7.41% in September to 6.77% in October, a three-month low. Nevertheless, for the tenth time in a row, was above the RBI’s tolerance band.
• Ahead of the RBI’s policy announcement, stocks open flat with a negative slant as the Sensex dips nearly 55 points and the Nifty falls 0.2%.
• Liquidity conditions are set to improve. Weighted average lending rate is up 117 bps in May-October.

The Monetary Policy Committee

An empowered six-member monetary policy committee (MPC) must be established by the Central Government by publication in the Official Gazette, according to Section 45ZB of the amended RBI Act, 1934. The first such MPC was constituted on September 29, 2016. The present MPC members, as notified by the Central Government in the Official Gazette of October 5, 2020, are as under:

1. Governor of the Reserve Bank of India—Chairperson, ex officio;
2. Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy—Member, ex officio;
3. One officer of the Reserve Bank of India to be nominated by the Central Board—Member, ex officio;
4. Prof. Ashima Goyal, Professor, Indira Gandhi Institute of Development Research —Member;
5. Prof. Jayanth R. Varma, Professor, Indian Institute of Management, Ahmedabad—Member; and
6. Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic Research, Delhi—Member.