4/25/2023 0 Comments Rbi next meetingRepo rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds by purchasing the security.Reduced economic growth: Higher interest rates can slow down economic growth by reducing the amount of money available for borrowing and spending.Decreased inflation: Higher repo rates can curb inflation by making borrowing more expensive and reducing spending, which can help keep prices stable.Stronger currency: Higher interest rates can attract foreign investment, strengthening the local currency.Reduced borrowing: The higher cost of borrowing can reduce the demand for loans, leading to a decrease in borrowing and spending, which can slow down economic growth.Higher borrowing costs: An increase in repo rate can lead to higher interest rates on loans for consumers and businesses, making borrowing more expensive.Possible Impacts of Increase in the Repo Rate Inflation is expected to be 5.3 per cent in FY24.The central bank has lowered the inflation target for FY23 from 6.7 per cent to 6.5 per cent – which is still above the RBI’s target level of 4 per cent.The MPC had slashed the GDP forecast for fiscal 2023 to 6.8 per cent from 7 earlier due to protracted geopolitical tensions, global slowdown and tightening of global financial conditions.The RBI has projected GDP growth for the next fiscal (FY2024) at 6.4 per cent.It was set up on the recommendations of the Urjit Patel committee in 2014.The MPC determines the policy interest rate (repo rate) required to achieve the inflation target (4%).The Governor of RBI is the ex-officio Chairman of the committee.It is a statutory and institutionalized framework under the Reserve Bank of India Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.Standing deposit facility (SDF): SDF rate stands adjusted to 6%.Marginal Standing Facility (MSF): The MSF rate will stand revised at 6.75%. ![]() Repo Rate: The repo rate has increased by a cumulative 250 basis points (a basis point is one-hundredth of one percentage point) to 6.50 per cent since May 2022.Possible Impacts of Increase in the Repo RateĬontext: The final meeting of the Monetary Policy Committee (MPC) for the financial year 2022-23 has concluded recently.UPSC EPFO Previous Year Question Papers.
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