RBI Monetary Policy Review - Hike In The Repo Rate, CRR Much Required At This Point: CareEdge

RBI Monetary Policy Review - Hike In The Repo Rate, CRR Much Required At This Point: CareEdge

<div class="paragraphs"><p>The Reserve Bank of India (RBI) logo. (Photographer: Dhiraj Singh/Bloomberg)</p></div>
The Reserve Bank of India (RBI) logo. (Photographer: Dhiraj Singh/Bloomberg)

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CareEdge Research Report

In a surprise move, Reserve Bank of India hiked the policy repo rate by 40 basis points to 4.40% in an unscheduled meeting. It is the first reversal in policy rate action since May 2020.

Liquidity adjustment facility corridor was maintained at 50 bps with the standing deposit facility rate adjusted to 4.15% as the floor and marginal standing facility at the upper end of the band at 4.65%.

Reverse repo rate was left unchanged at 3.35%.

RBI retained the monetary policy stance as ‘accommodative’ with a focus on withdrawal of accommodation.

Cash reserve ratio has been increased by 50 bps to 4.50% of net demand and time liabilities, effective from May 21, 2022. This would amount to a liquidity withdrawal of Rs 87,000 crore.

The decision of hiking the policy rate while maintaining an accommodative policy stance was unanimous by all members of the Monetary Policy Committee.

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CareEdge RBI Monetary Policy May 2022.pdf


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