With a view to leash the inflation, unleash the growth and strengthen the Rupee. RBI has increased the Repo rate, and reduced the MSF rate in its policy declared on 29/10.
The increase in the Repo rate was expected by banks, but further in order to increase the liquidity in the market and to foster growth, RBI reduced the MSF rate.
RBI Guv – Mr. Rajan had increased the repo rate mid september by 25 bps.. I.e from 7.25 to 7.5% . Yesterday it was raised to 7.75%.
The MSF rate was cut from 9% to 8.75%
With the fear of repo rate hiking by 50 bps and actually being hiked by 25 bps, markets showed a positive trend. BSE Sensex rose by 359 points and closed at 20329. Bank Nifty also showed a positive trend.
RBI Guv assured all that the central bank is still not done with its policy to strengthen the Rupee, and there will be still more measures to come.