RBI Monetary Policy: Repo rate raised by 25 bps to 6.5%; check key announcements by Guv Shaktikanta Das

Authored by
Team Espresso
February 08 2023
2 min read

The Reserve Bank of India’s (RBI) rate-setting panel on February 8 raised the key repo rates by 25 basis points (bps) to 6.50% amid softening inflation and decided to remain focused on the withdrawal of an accommodative stance. The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks.

The policy review meeting of the central bank’s Monetary Policy Committee (MPC) was held from February 6 to 8, which was the last for the financial year 2022-2023.

MPC members Michael Debabrata Patra, Shashanka Bhide, Rajiv Ranjan and Shaktikanta Das voted for an increase in the policy repo rate by 25 basis points. Meanwhile, two members, Ashima Goyal and Jayanth Varma, voted against the rate hike.

This is the sixth straight repo rate hike delivered by the RBI. Since May 2022, the central bank has raised the repo rates by 250 bps. Check out some of the key takeaways from the MPC meeting:

Policy Rates & Stance

RBI increased repo rates by 25 bps to 6.5%. The standing deposit facility rate and marginal standing facility were adjusted to 6.25% and 6.75% respectively.

The MPC was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break the persistence of core inflation and thereby strengthen the medium-term growth prospects.


The RBI expects inflation to moderate in FY24 but is likely to remain above the 4% target. It projects inflation to be at 6.5% in 2022-23, with Q4 at 5.7%. On the assumption of a normal monsoon, CPI inflation is projected at 5.3% for 2023-24, with Q1 at 5.0%, Q2 at 5.4%, Q3 at 5.4% and Q4 at 5.6%, and risks evenly balanced


In his policy statement, RBI Governor Das said that broad-based credit growth, improving capacity utilisation, government’s thrust on capital spending and infrastructure should bolster investment activity.

However, protracted geopolitical tensions, tightening global financial conditions and slowing external demand may continue as downside risks to domestic output, he added.

Taking all these factors into consideration, RBI projects real GDP growth for FY2023-24 at 6.4% with Q1 at 7.8%; Q2 at 6.2%; Q3 at 6.0%; and Q4 at 5.8%.


The system liquidity remains in surplus, though of a lower order compared to April 2022. The RBI will remain flexible and responsive towards meeting the productive requirements of the economy and will conduct operations on either side of the LAF, depending on the evolving liquidity conditions.

In the period ahead, while higher government expenditure and the anticipated return of forex inflows are likely to augment systemic liquidity, it would get modulated by the scheduled redemption of LTRO and TLTRO funds during February to April 2023, the governor added.

The RBI also set out various developmental and regulatory policy measures relating to Financial Markets, Regulation, Payment and Settlement Systems and Currency Management.

SEBI has released operational guidelines for the issuance of green bonds in India, outlining eligibility and disclosure criteria as well as a verification process. The guidelines are aimed at promoting the development of the green bond market and enhancing transparency and accountability.


With a nearly 2% fall since the beginning of 2023, the Indian benchmark barometer has emerged as one of the worst performers in 2023 among global peers.