RBI MPC Meeting: The new Governor of Reserve Bank of India, Sanjay Malhotra, has ended the wait of the common man in his first Monetary Policy Committee meeting. After the 3-day MPC meeting, he has announced a 0.25 percent cut in the repo rate.
This will make all types of retail loans including home, auto and personal cheaper. RBI had maintained the repo rate at 6.50 percent in 11 consecutive MPC meetings, but reduced it to 6.25 percent in the 12th meeting.
RBI has changed the repo rate for the first time since May 2023. Then it was increased by 0.25 percent to 6.50 percent and since then this rate has remained the same in 11 consecutive MPC meetings. Sanjay Malhotra, who came after the retirement of former governor Shaktikanta Das, has decided to cut the repo rate to accelerate the growth rate. The growth rate of the Indian economy fell to its lowest level in 4 years in the second quarter.
Other rates have also been changed.
RBI has not only changed the repo rate, but has also reduced the marginal standing facility (MSF) rate to 6.5 percent. MSF means how much of their total capital banks can borrow from RBI. Apart from this, the standing deposit facility (SDF) rate has been increased to 6 percent. This is the figure that RBI manages to calculate the total liquidity in the economy. With this, the reverse repo rate has been reduced to 3.35 percent. Banks borrow from RBI at this rate. CRR, the share of money kept in reserves by banks, has also been increased to 4.5 percent.
Growth rate to remain around 7 percent
RBI has estimated that although the growth rate in the second quarter of the current financial year was the lowest in 4 years, it is likely to increase in the coming time. Increasing demand in rural areas will give a boost to the economy and the growth rate is expected to be 6.75 percent in the first quarter of the new financial year starting from April, 6.7 percent in the second quarter, 7 percent in the third quarter and 6.5 percent in the fourth quarter.
