RBI: The report is likely to remain stable even in October! A claim in SBI's research report

New Delhi, 25 September-2023, Monday

Reserve Bank of India - RBI's Monetary Policy Committee meeting will be held in the first week of October next. However, before that, a research report of SBI has claimed that the RBI may keep the rate constant even in the meeting to be held in October. The meeting will be held on October 4-6. RBI usually holds 6 bi-monthly meetings in a financial year, in which the country's apex bank takes decisions on interest rates, money flow, inflation and various economic indicators.

What is in the research report of SBI?

A research report by SBI said that considering the domestic level, we expect the repo rate to remain at 6.50 percent and with inflation coming down from earlier, this repo rate position is likely to remain stable for a long time... This report by SBI Prepared by Chief Economic Advisor Soumya Kanti Ghosh. In the report, Soumya Kanti Ghosh has said that, we believe that the inflation rate may remain below 5 percent in the financial year 2023-24, due to which the Reserve Bank may keep the repo rate unchanged for now. In the report, the growth rate is also expected to remain strong. Also, oil prices are likely to remain stable.

The repo rate was kept unchanged in the previous meeting

It is to be mentioned that, earlier in the meeting of RBI held in April, June and August, the repo rate was kept unchanged at 6.5 percent.

India keeps inflation under control: Report

According to the SBI report, rising inflation is a matter of concern for the world, although India has done well in this regard and has kept inflation under control. Now the inflation rate is coming down and is expected to come down further in the coming days. In such a situation the repo rate can remain stable. Earlier in May-2022, the Reserve Bank had increased the repo rate by 250 basis points to curb inflation.

What is a report?

We take loan from bank. In return we pay interest to the bank. Similarly, a bank also requires a lot of money for its needs or daily operations. For that, the bank takes a loan from the Reserve Bank of India. The interest that the bank pays to the Reserve Bank on this loan is called the repo rate.

Impact of repo rate on common people

If the bank gets a loan from the Reserve Bank at a low interest rate, its cost of raising funds will be reduced. Due to this, it can offer cheap loans to its customers. It means that the interest rates on home, car or personal loans of common customers may come down as the repo rate falls.

What is Reverse Report?

Reverse repo rate is the opposite of repo rate. Banks often have large sums of money outstanding after a full day of business. The bank can keep this amount in the Reserve Bank, on which they also get interest. The rate at which this interest is earned is called reverse repo rate. If the Reserve Bank feels that there is excess cash in the market, it increases the reverse repo rate, so that banks are encouraged to keep their money with the Reserve Bank to earn more interest, thus leaving less money for them to lend to the market.