The Reserve Bank of India (RBI) on September 30 announced a 50 basis points hike in the repo rate stepping up its fight against persistently high inflation. With the latest rate hike, the repo rate now stands at 5.9 per cent.
Latest RBI Policy Rates
|Policy Repo Rate||: 5.90%|
|Standing Deposit Facility Rate||: 5.65%|
|Marginal Standing Facility Rate||: 6.15%|
|Bank Rate||: 6.15%|
|Fixed Reverse Repo Rate||: 3.35%|
What is Repo rate?
Repo rate is the rate at which the central bank lends short-term funds to banks. One bps is one-hundredth of a percentage point. With the latest rate hike, the repo rate now stands at 5.9 per cent.
A 50 bps increase in the repo rate this week is the fourth consecutive hike since May. This has taken the repo rate, at which the RBI lends short-term funds to banks, to 5.90 per cent – the highest level since April 2019 – from 5.40 per cent.
Monetary Policy Committee
The Monetary Policy Committee (MPC) began its three-day meeting on September 28 and announced the outcome on September 30.
The MPC has increased the policy repo rate by 140 basis points since May to quell inflationary pressure. The consumer price index (CPI) based retail inflation, which had started showing signs of moderation since May, has again firmed up to seven per cent in August. The RBI takes into account retail inflation while framing its bi-monthly monetary policy.