RBI Keeps Lending Rate Unchanged: 5 Key Takeaways From MPC Statement

The RBI’s Monetary Policy Committee unanimously decided to maintain the repo rate at 6.50%. Additionally, the GDP growth projection for FY2023-24 has been revised upward to 6.50% from 6.4%. To know more, read the article that highlights the 5 key takeaways from today's MPC statement.

Swati Dayal
New Update

The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) maintains its key lending rate, the repo rate, at 6.50 per cent and retains its "withdrawal of accommodation" stance. 

Since May 2022, the RBI's MPC has raised the repo rate by 250 bps in the last 11 months.

What Are The Key Decisions Announced By Monetary Policy Committee Today?

  • Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.
  • The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
  • The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

In a statement, RBI Governor Shaktikanta Das said the decision to hold the rate is only for this meeting and the committee is prepared to take further action if necessary, at future meetings.

In his address, Das said, “The global economy is now witnessing a renewed phase of turbulence with fresh headwinds from the banking sector turmoil in some advanced economies. Bank failures and contagion risk have brought financial stability issues to the forefront. Given the stubbornness in inflation, central banks continue to tighten monetary policy, although at a reduced pace. Inflation globally has moderated in the recent months, but its descent to the target is proving to be long and arduous.”

What is Key Lending Rate?

The Key Lending Rate or Repo Rate is the interest rate at which the RBI lends money to commercial banks. Changes in the repo rate by the RBI can have a significant impact on the country's financial markets and economy.

What Does RBI Mean by "Withdrawal of accommodation"?

"Withdrawal of accommodation" is a term used by central banks to describe the process of gradually reducing monetary stimulus measures that were implemented to support the economy during a crisis. In the context of the RBI's monetary policy, it refers to the central bank's decision to tighten its monetary policy by reducing the availability of funds to banks and increasing borrowing costs, in order to control inflation and maintain financial stability.

What are the key highlights from the first bi-monthly monetary policy of 2023-24?

GDP forecast:

The RBI's MPC slightly revised the GDP growth projection upward to 6.50 per cent for FY2023-24, compared to its earlier estimate of 6.4 per cent.

Governor Das stated that GDP growth in Q1 FY24 is anticipated at 7.8 per cent, followed by 6.2 per cent in Q2, 6.1 per cent in Q3, and 5.9 per cent in Q4.

Banking crisis:

The central bank supremo said the RBI is closely monitoring the turmoil in the banking sector in developed countries.

RBI Governor Shaktikanta Das stated that despite recent positive indicators in global economic activity, the outlook is now tempered by additional downside risks from financial stability concerns. However, he added that amidst the volatility, the banking and non-banking financial service sector in India remain healthy, and financial markets have evolved in an orderly manner. Economic activity remains resilient, and real GDP growth is expected to have been 7% in FY23.


Regarding inflation, Das said that while headline inflation is moderating, it remains well above the targets of the central bank. These developments have led to heightened volatility in global financial markets. The war against inflation will continue until there is a durable decline, he added, stating that the central bank has projected inflation to marginally decline to 5.2% in FY24. In Q1 FY2024, inflation is projected at 5.1%, followed by 5.4% in the second and third quarters and 5.2% in the fourth quarter of the current financial year.

Liquidity and Rupee Management

In terms of liquidity and rupee management, Das stated that India's current account deficit will remain moderate in Q4 FY23 and also eminently manageable going forward. The RBI will maintain an agile approach for liquidity management to manage the government's borrowing program in a non-disruptive manner, he added.

Das added, “Indian Rupee moved in an orderly manner in FY23.” He further said that the RBI will remain watchful of the currency.

In his concluding remarks, the Reserve Bank Governor expressed satisfaction that in the face of extreme uncertainty since early 2020, India's financial sector has remained stable and resilient. With a firm commitment to price and financial stability, India remains vigilant and ready to face future challenges.