RBI REPO rate - updated 4th October 2017

RBI REPO rate – updated 4th October 2017


The Reserve Bank of India on Wednesday 4th October 2017 in its fourth Bi-Monthly Statement for 2017-18   kept the key policy rates unchanged.

The policy key rates at present are as under.

CRR (Cash Reserve Ratio)   4.00%
SLR  (Statutory Liquidity Ratio) W.e.f June 24, 2017

With effect from 14.10.2017*

20.00%

19.5%*

Repo Rate   6.00%
Reverse Repo Rate   5.75%
MSF Rate (Marginal Standing Facility Rate)   6.25%
Bank Rate   6.25%

*[In the 4th bimonthly policy statement 2017-18 RBI has announced that the SLR requirement of banks have been reduced to 19.5% from existing 20 % with effect from October 14,2017].
As per present rule, banks are permitted to exceed the limit of 25% in totla investments under HTM category subject to excess investments comprise of SLR securities and total SLR securities held under HTM category are not more than 20.5% of NDTL. In order to align the SLR holdings under HTM category with mandatory SLR, the Apex bank has reduced the HTM category ceiling from 20.5% to 19.5% in a phased manner, i.e. 20 per cent by December 31, 2017 and 19.5 per cent by March 31, 2018.

The MPC in its observation said that ‘CPI inflation has risen by around two percentage points since its last meeting. These price pressures have coincided with an escalation of global geo-political uncertainty and heightened volatility in financial markets due to the US Fed’s plans of balance sheet unwinding and the risk of normalisation by the European Central Bank. Such juxtaposition of risks to inflation needs to be carefully managed. Although the domestic food price outlook remains largely stable, generalized momentum is building in prices of items excluding food, especially emanating from crude oil. The possibility of fiscal slippages may add to this momentum in the future. The MPC also acknowledged the likelihood of the output gap widening, but requires more data to better ascertain the transient versus sustained headwinds in the recent growth prints. Accordingly, the MPC decided to keep the policy rate unchanged’.

Third bimonthly report

Reserve Bank of India in its Press release on August,2,2017, Wednesday, said that the MPC in its third Bi-Monthly Statement for 2017-18,  decided  to  reduce  the  policy  repo  rate  by  25  basis  points.  With the above monetary policy decision of reducing the policy rates, the repo rate (the rate at which banks borrow funds from the RBI) stays at 6.00 per cent.

With the above monetary policy decision of  Apex Bank to reduce the policy rates, the repo rate (the rate at which banks borrow funds from the RBI)  now stays at 6.00 per cent.

The key policy rates:

CRR (Cash Reserve Ratio)   4.00%
SLR  (Statutory Liquidity Ratio  20.00%
Repo Rate   6.00%
Reverse Repo Rate   5.75%
MSF Rate (Marginal Standing Facility Rate)   6.25%
Bank Rate   6.25%

It is informed in the RBI’s Press Release that the six members Monetary Policy Committee (MPC) has taken neutral stance in  view of consonance with the objective of achieving the medium term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 %, while supporting  growth.Though  MPC  noted  that  some  of  the  upside  risks  to  inflation  have  either  reduced  or  not materialised  the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4 per cent by Q4 which has necessitated them to reduce the policy rates by 25BPS.
Related articles:

Different types of repos in money market

Do you know that Repo auction frame work is different from Repo rate

How RBI monitors money circulation in India?
What is bank rate?
Effects of Repo Rate, Reverse Repo rate changes
What is Marginal Standing Facility (MSF)?

CRR and SLR: How they affect on bank credits?

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