RBI’s much-awaited Monetary Policy Committee meeting ended today before the full budget for the financial year 2024-25. After the meeting ended, Reserve Bank Governor Shaktikanta Das said that the committee has once again decided not to make any change in the main policy rate, i.e., the repo rate stable at this level for 16 months
This means the repo rate will remain stable at 6.5 per cent. This is the 8th consecutive meeting of the powerful Monetary Policy Committee of the Reserve Bank when no change has been made in the repo rate. The Central Bank’s MPC last changed the repo rate in February 2023, then increased to 6.5 per cent. The repo rate has been stable at the same level for 16 months.
Will Not Get The Benefit Of Cheap Loan Now
RBI Governor Shaktikanta Das’s announcement has disappointed those expecting a reduction in interest rates. Since the repo rate has not changed, the people’s EMI burden will not change. On the other hand, this announcement is good news for investors who like to invest in FDs. The continuation of a higher repo rate means that the benefit of higher interest on FDs will continue.
What Is Repo and Reverse Repo Rate?
The repo rate is the interest rate banks get money from the RBI. Because of this, whenever the repo rate changes, the interest rates of personal, car, and home loans also change. A decrease in the repo rate reduces the interest on the loan, while an increase in the repo rate makes the loans expensive. Similarly, the rate at which the Reserve Bank gives interest to banks in return for the money deposited with it is called the reverse repo rate.
So Many Members Agree On Keeping The Repo Rate Stable
Reserve Bank Governor Shaktikanta Das said after the meeting on Friday that the Monetary Policy Committee has decided to keep the repo rate stable by majority after reviewing the macroeconomic conditions. Out of 6 members of the MPC, 4 have decided not to change the repo rate. The committee has decided to keep the repo rate stable at 6.50 per cent.
RBI Is Worried About Inflation
Earlier in April, the first meeting of the monetary policy committee of the Reserve Bank was held during the current financial year. In that meeting, MPC did not change the repo rate, citing inflation. The Reserve Bank wants to bring retail inflation below 4 per cent. Last month, retail inflation reached an 11-month low, which is still well above the RBI target of 4.83 per cent. Inflation of food items is particularly worrying, the rate of which reached a four-month high of 8.7 per cent in May.
