RBI Monetary Policy 2023: Repo Rate Hike & Other Highlights

In the first Monetary Policy Statement of 2023 on Wednesday, the Reserve Bank of India’s Governor Shaktikanta Das announced the raise in the repo rate by 25 basis points to 6.5%. The repo rate was raised by 0.35 percentage points to 6.25% in December 2022. The reverse repo rate of 3.35% remained unchanged.

Under the announcement, the GDP's real growth for 2023-24 is projected at 6.4%. The projected growth for each quarter is Q1 at 7.8%, Q2 at 6.2%, Q3 at 6%, and Q4 at 5.8%.  

"Looking ahead, while inflation is expected to moderate in 2023-24, it is likely to roll above the 4% target. The outlook is clouded by continuing uncertainties from geopolitical tensions, global financial market volatility, rising non-oil commodity prices and volatile crude oil prices," Das quoted.

Talking about the Indian economy’s resilience, the RBI governor said, “Heartening to know the Indian economy dealt with multiple shocks in the last three years and emerged stronger than before. India has the inherent strength and enabling policy environment and strong macroeconomic fundamentals to deal with future challenges.

Here are the highlights from RBI Monetary Policy 2023 presented by RBI Governor Shaktikanta Das:

RBI Monetary Policy 2023 On Economy, Inflation & GDP

1. The Monetary Policy Committee decided by a majority to increase the policy rate by 25 basis points.

2. The Marginal Standing Facility (MSF) Rate of India will be revised to 6.75% from  6.5% in December 2022.

3. The Standing Deposit Facility (SDF) Rate of India will be adjusted to 6.25% from 6% in December 2022

4. Inflation in Financial Year 2023 is projected to be at 6.5%.

5. Inflation in Financial Year 2024 is seen at 5.3%. 

6. Inflation is expected to average around 5.6% between Jan to March in Financial Year 2023.

7. The Consumer Price Index (CPI) Inflation will be at 5.3% for 2023-24.

8. GDP growth in Financial Year 2023 is projected to be at 7%.

9. The non-food credit increased to 16.7% on 27th January.

RBI Monetary Policy 2023 On UPI

1. Reserve Bank of India has proposed to extend the UPI facility to inbound travellers for payments to merchants. 

2. The UPI facility will be available to travellers from G20 countries first, at selective airports.

3. QR code-based coin vending machines will be placed in 12 cities as a pilot.

RBI Monetary Policy 2023 On Banking

1. The banking system is no longer facing excess liquidity.

2. RBI will now allow banks to lend and borrow government bonds.

RBI Monetary Policy 2023 on Rupee

1. Rupee has remained the least volatile among its asian peers.

2. The depreciation of the rupee is far lower than the taper tantrum that occurred in 2013. 

These are all the major highlights from RBI Monetary Policy 2023. Stay tuned on our page to know how these hiked repo rates will impact the real estate industry!

Also Read: Top Highlights of Union Budget 2023