RBI Monetary Policy Review – MPC Raises Policy Repo Rate by 50 Bps to 5.9%: Motilal Oswal

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The Reserve Bank of India raised its policy (repo) rate by 50 basis points to 5.9% on 30 September 2022. As a result, the standing deposit facility and margin standing facility/bank rate are now 5.65% and 6.15% respectively .

The hike was in line with the market and our expectations. This is the fourth interest rate move by the central bank in FY23 to date.

Cumulatively, the RBI has raised the repo rate by 190bp (excluding the 40bp increase in SDF in April 2022) in three scheduled and one out-of-swing policy meeting.

The Monetary Policy Committee reiterated its continued focus on “housing withdrawal” to contain inflation while supporting growth.

The decision to raise the interest rate was made with a majority of 5-1, where Dr. Ashima Goyal voted for a 35 bps rate hike. The decision on its position was also taken by a five-to-one majority when Dr. Jayanth Varma expressed reservations about the stance.

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