Monetary Policy Committee Report: February 2024


The “Monetary Policy Committee” (MPC) of RBI presented its bi-monthly report on February 8, 2024.

Main decisions-

The major decisions of the Monetary Policy Committee are as follows,

  • Repo rate unchanged at 6.50 percent
  • Reverse repo rate is 3.75%
  • Bank rate unchanged at 6.75 percent
  • Fixed deposit facility rate unchanged at 6.25 percent
  • Marginal Standing Facility rate unchanged at 6.25%
  • Real GDP growth is estimated at 7.0 percent in fiscal year 2024-25 and 7.2 percent in the first quarter .
  • These decisions are in line with the objective of achieving inflation within the band of +/- 2 per cent of 4 per cent.
  • This is the sixth consecutive time that key rates have not been changed.  
  • This is also the sixth consecutive monetary policy report to come after the announcement of the interim budget on February 1 , 2024 .


  • Uncertainty in food prices continues to impact core inflation 
  • Inflation rate is expected to be 4.5% in the financial year 2024-25
  • The growth rate will remain intact even in the financial year 2024-25
  • Rupee will stabilize, which is a sign of strength in the Indian economy.
  • Rural demand will continue to rise and urban consumption will also remain strong.
  • Manufacturing sector will continue to be profitable 
  • Private capital expenditure cycle will improve
  • There is a possibility of improvement in business practices
  • There are investment opportunities due to good balance sheets of banks and corporates 
  • The improving global trade outlook and increasing integration into global supply chains will support net external demand. 
  • Geopolitical turmoil and instability in international financial markets may create adverse circumstances.

Monetary Policy Committee

  • It is constituted by the Central Government under Section 45ZB of the RBI Act, 1934 (as amended in 2016) .
  • Its purpose is to set the policy rate necessary to achieve the inflation target .
  • There are 6 members in this committee-
  • Governor (ex-officio Chairman) of RBI
  • Deputy Governor (in charge of monetary policy, ex officio member)
  • An officer (ex-officio member) nominated by the Central Board of RBI
  • 3 members appointed by the Central Government (tenure for a term of 4 years or until further orders, whichever is earlier)
  • Its meetings are held at least 4 times a year , for which the quorum is 4 members .

Repo Rate-

  • Repo rate is the interest rate at which RBI lends money to commercial banks on the condition of repurchase of the security.
  • Commercial banks borrow money from RBI to meet their short term liquidity needs.
  • It is also called repurchase rate.
  • It is used to control inflation.

Reverse Repo Rate -

  • The interest rate at which commercial banks deposit their liquidity surplus with RBI for short term or provide loans to it is called reverse repo rate.
  • It is used to reduce liquidity.

Bank Rate-

  • The interest rate at which RBI provides long term loans to commercial banks is called bank.
  • Through this, the credit creation capacity of commercial banks is affected.

Standing Deposit Facility Rate ( SDFR) –

  • Under this, commercial banks can give as much money as they want to RBI at a rate lower than the reverse repo rate without any guarantee (security).
  • It helps RBI to absorb excess liquidity (deposits) from commercial banks without giving government securities.
  • Its idea was first given in the year 2014 in the report of Urjit Patel Monetary Policy Committee .
  • RBI announced to launch it in the year 2022.

Marginal Standing Facility Rate ( MSFR ) -

  • The interest rate at which RBI provides overnight loans to scheduled commercial banks is called MSFR.
  • Its objective is to overcome the liquidity problem of banks in case of emergency.
  • Under this, only scheduled commercial banks can get loans from RBI.
  • The interest rate on loans availed under MSFR is 1% above the repo rate.
  • It was started by RBI in May, 2011.

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