New Delhi: Despite rising inflation, the Reserve Bank of India (RBI) retained the benchmark interest rate at 4% on Friday and opted to maintain its accommodative posture.


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The Monetary Policy Committee (MPC), led by RBI Governor Shaktikanta Das, has kept the status quo for the 11th time in a row. In an off-policy cycle, the RBI dropped its policy repo rate, or short-term lending rate, to a historic low on May 22, 2020, in order to boost demand by decreasing the interest rate to a historic low.


10 key highlights


  • Now, two years after the pandemic, the global economy has experienced tectonic shifts, starting on February 24th with the start of the war in Europe, followed by sanctions and growing geopolitical tensions, according to RBI Governor Shaktikanta Das.
  • The central bank announced that the liquidity adjustment facility's width would be restored to 50 basis points.
  • According to Governor Das, war could stymie economic recovery; the RBI has lowered its growth forecast for FY23 to 7.2 percent.
  • The marginal standing facility (MSF) rate and the bank rate both remain at 4.25 percent. Furthermore, the Reserve Bank has decided to restore the width of liquidity adjustment facilities, i.e. the LAF corridor, to 50 basis points, as it was prior to the pandemic.
  • According to RBI Governor Das, global crude oil prices remain volatile at high levels.
  • The RBI will work to maintain a stable financial environment in the market and will take steps to mitigate the impact of global spillovers.
  • According to Das, the Indian economy is gradually recovering from the effects of the pandemic. The MPC has decided to hold the reverse repo rate at 3.35 percent.
  • Inflation is likely to grow to 5.7 percent in FY23, up from 4.5 percent previously forecast.
  • The Indian economy is buoyed by significant foreign exchange reserves, and the Reserve Bank of India (RBI) is ready and resolute to defend the economy, according to Das.
  • Rural demand should be supported by a robust rabi crop, while urban demand will be boosted by an increase in contact-intensive services.

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