RBI hikes policy repo rate under the liquidity adjustment facility
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- By Chetan Kulasri
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- Last Updated on 6 August, 2022
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PRESS RELEASE: 2022-2023/650, Dated August 05, 2022
The Monetary Policy Committee (MPC) of the RBI has announced the increase in the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points to 5.40 per cent with an immediate effect. Earlier the prescribed repo rate was 4.90 percent. The standing deposit facility (SDF) rate stands adjusted to 5.15 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.65 per cent. The MPC said that the decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
The repo rate is now back to pre-pandemic levels, and at the highest since 2019. The increase in the repo rate by 50 basis points would result into an increase in EMI burden for the new borrower and for those borrowers who have borrowed repo rate linked long-term loans.
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