The latest buzz is that the six-member Monetary Policy Committee (MPC) chaired by Reserve Bank of India (RBI) Governor Shaktikanta Das has decided to keep the repo rate unchanged at 4 per cent, while the reverse repo rate also was kept unchanged at 3.35 per cent. For the last two years, some changes had been anticipated in this direction but nothing concrete had been discussed in the recent past. In the wake of this recent announcement, it would be insightful to see what the Central Bank Governor has announced in the same regard.
The central bank governor said that the MPC had voted unanimously to maintain the accommodative stance and added that the reverse repo rate too was kept unchanged at 3.35 per cent. This means that monetary Policy Committee stays undivided on how they want new policies to be accepted by the people for whom they are made in the first place. For the uninitiated once, it is important to understand what does Repo Rate mean. In simple words, it is a repurchase agreement that allows short term borrowing, primarily in government securities.