Monetary policy making: 2022 was year of reset, 2023 could be a long pause

25 bps raise likely in Feb, before RBI hits status quo button, feel experts

The year 2022 saw the Reserve Bank of India (RBI) start acting on the policy repo rate after a gap of two years.

The six-member monetary policy committee of the RBI reduced interest rate sharply — by 115 bps — when Covid-19 struck in 2020. In March 2020, days after the nationwide lockdown was announced, MPC in an unscheduled meeting reduced the repo rate by 75 bps, followed by another 40 bps in May. Status quo was maintained for the next two years since the May repo rate hike.

The clamour for interest rate hike started to grow from the