Once again RBI Repo Rate remain unchanged: interest rate will remain at 6.5% only

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Unlocking the Secrets of RBI Repo Rate: What You Need to Know

Once again it has been decided to keep the Repo Rate at 6.5% for the sixth consecutive time by The Monetary Policy Committee (MPC) of RBI.

Shaktikanta Das

RBI Repo Rate: The Monetary Policy Committee (MPC) of the Central Reserve Bank has once again not made any change in the policy interest rate – repo rate. It has been decided to keep the repo rate at 6.5% (unchanged) for the sixth consecutive time. Governor Shaktikanta Das said in his address that The Indian economy has outperformed amid volatile global conditions. Inflation also seems to be coming down. And only mixed signals are being received from the global economic scenario. He stated that the repo rate was addressed in depth at the meeting, and the committee determined that it should remain steady at 6.5%. Five of the six members voted in support.

What is repo and reverse rate-

Repo Rate:

The repo rate, short for repurchase rate, is the interest rate at which central banks lend money to commercial banks against securities such as government bonds. It serves as a crucial tool for monetary policy implementation, allowing central banks to regulate liquidity in the financial system. When the central bank reduces the repo rate, commercial banks' borrowing costs fall, encouraging them to borrow more. This, in turn, stimulates economic activity by making loans more affordable for businesses and consumers. Conversely, raising the repo rate makes borrowing more expensive, which can help to curb inflation but may also slow down economic growth.

Reverse Repo Rate:

The reverse repo rate is the interest rate at which the central bank borrows funds from commercial banks. It is basically the reverse of the repo rate. When the central bank increases the reverse repo rate, it incentivizes commercial banks to park more funds with the central bank, as they can earn a higher interest rate on these deposits. This action helps to absorb excess liquidity from the financial system and can be used as a tool to control inflation or stabilize the economy. Conversely, lowering the reverse repo rate encourages banks to lend more money to the central bank, thereby injecting liquidity into the system to stimulate economic activity.

RBI Repo Rate from 2022 to Till Date:

FAQ

Q1. What is RBI repo rate today?

A.  RBI Monetray Policy Committee has decided to keep repo rate unchanged.  Interest              rate  will remain at 6.5% .

Q2. What does mean by repo rate?

A.  Technically, it is applicable interest rate of an agreement between bank and RBI in                which bank provide eligible securities while availing loan from RBI.