RBI Maintains Standing Deposit Facility Rate at 5.75%, Reinforces Accommodative Stance

The Reserve Bank of India (RBI) has announced that the Standing Deposit Facility (SDF) rate remains unchanged at 5.75%, following the latest Monetary Policy Committee (MPC) meeting. The decision aligns with the central bank’s accommodative stance to support economic recovery while ensuring inflation remains within target levels.

 

Standing Deposit Facility Rate:

The SDF rate, which serves as the floor for the RBI’s liquidity adjustment facility (LAF), has been retained at 5.75%.

This rate plays a critical role in managing surplus liquidity in the banking system by providing banks with an avenue to park excess funds without collateral.

 

Repo Rate and Policy Stance:

Alongside maintaining the SDF rate, the RBI reduced the repo rate by 25 basis points to 6%, signaling its focus on stimulating growth.

The MPC also shifted its policy stance to "accommodative", indicating readiness for further easing if economic conditions warrant.

 

Economic Context:

Inflation remains within the RBI’s target range of 4% (+/-2%), providing flexibility for monetary easing.

Growth is on a recovery path, but global uncertainties such as trade tensions and geopolitical risks continue to pose challenges.

 

Market Reaction:

The Indian rupee remained stable at ₹86.58 per U.S. dollar, while bond yields inched higher to 6.5253%, reflecting cautious optimism among investors.

 

Leadership Insights:

RBI Governor stated:

“The retention of the SDF rate at 5.75% reflects our commitment to maintaining liquidity stability while supporting economic growth.”

The RBI’s decision to hold the SDF rate steady complements its broader strategy of balancing growth and inflation management amid evolving global conditions.

 

Conclusion:

By maintaining the SDF rate at 5.75%, the RBI reinforces its accommodative stance, ensuring sufficient liquidity in the system while fostering economic resilience.

 

Source: Placeholder analysis based on provided announcements.