RBI keeps repo rate unchanged at 5.5 per cent; Governor highlights inflation and growth outlook

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The Reserve Bank of India's Monetary Policy Committee (MPC) has unanimously decided to keep the repo rate constant at 5.5 per cent. RBI Governor Sanjay Malhotra, while highlighting the policy, indicated that the repo rate will not be changed and will stay stationary at 5.5 per cent.

As reported by news agency ANI, the RBI governor informed that the MPC met on September 29 and 30 and October 1. The meeting was organised to deliberate on the prevailing economic conditions and decide on the interest rate trajectory.

After a detailed assessment of the evolving macroeconomic outlook, the MPC committee voted unanimously to maintain the repo rate at 5.5 per cent.

RBI Governor Sanjay Malhotra further stated, "The MPC voted unanimously to keep the policy repo rate unchanged at 5.5 per cent," as cited by news agency ANI.

With this decision, the Standing Deposit Facility (SDF) rate also remains unchanged at 5.25 per cent. The Marginal Standing Facility (MSF) rate and the Bank Rate also stay unchanged at 5.75 per cent.

What are SDF and MSF?

The Standing Deposit Facility (SDF) rate is the interest rate the RBI pays to banks that deposit their surplus, uncollateralised funds with the central bank on an overnight basis.

Whereas the Marginal Standing Facility (MSF) rate refers to the penal interest rate that scheduled commercial banks pay when they borrow overnight liquidity from the RBI as a last resort, particularly when funds are not available in the interbank market.

Highlighting the backdrop for the decision, Governor Malhotra said that since the August policy meeting, amid a fast-changing global economic environment, there have been significant developments on the domestic front as well. Considering the current scenario, we have altered the growth and inflation narrative in India.

The RBI Governor further emphasised that, "Since the August policy meeting, significant developments on the domestic front amidst a fast-changing global economic landscape have altered the narrative on growth inflation dynamics in India. Buoyed by a good monsoon, the Indian economy continues to exhibit strength by registering a higher growth in Q1, as cited by news agency ANI.

At the same time, RBI governor Sanjay Malhotra also pointed out that there has been a considerable moderation in headline inflation, providing comfort to the MPC in maintaining the current rate stance.

(With inputs from ANI)