Monetary Policy in 2 minutes

What did the RBI do today?Take a quick look

Monetary action
 

Repo rate hiked by 25 bps to 7.75%

MSF rate cut by 25 bps to 8.75%

CRR left unchanged at 4%

Liquidity support via term repo hiked to 0.5% of NDTL from 0.25%
 

Objective
 

Repo rate hike to combat inflation

MSF rate reduced as currency stabilised

Extra liquidity support to ensure flow of credit
 

Growth & inflation

GDP growth seen at 5% for this fiscal

WPI inflation to remain higher than current levels

Retail inflation to remain around 9% in the absence of policy action
 

Developmental measure: Five pillars
 

Strengthen monetary policy framework

Entry of new banks, new varieties of banks

Deepening financial markets and increasing liquidity

Expanding access to finance to SME, unorganised sector

To improve system’s ability to deal with corporate and financial institution distress