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    Question

    RBI’s Monetary Policy Committee (MPC) had decided

    to increase the repo rate by how much basis points?
    A 20 basis points Correct Answer Incorrect Answer
    B 28 basis points Correct Answer Incorrect Answer
    C 50 basis points Correct Answer Incorrect Answer
    D 40 basis points Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation. The Monetary Policy Committee is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee are held at least 4 times a year and it publishes its decisions after each such meeting. The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) voted unanimously to increase the repo rate by 50 basis points to 4.90% in a bid to slow inflation. The Standing Deposit Facility and Marginal Standing Facility rates raised by 50 basis points. The standing deposit facility (SDF) rate and marginal standing facility rate (MSFR) stood at 4.65 per cent and 5.15% respectively. GDP growth forecast for FY23 retained at 7.2%. Output was projected to expand by 16.2% in Q1, by 6.2% in Q2, 4.1% in Q3 and rise 4.0% in Q4. CPI inflation forecast for FY23 raised to 6.7 percent from 5.7%.

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