NEW DELHI: In contrast to the widely held view that the pace of transmission of monetary policy action to deposit rates has been slower, Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday said the weighted average domestic term deposit rates have increased at a higher pace than those of lending rates.
While announcing the December 2022 policy statement, the governor said that the weighted average rate of fresh deposits has increased by 150 basis points compared to 117 basis points increase in the weighted average lending rates on fresh rupee loans.
Das said that the pace of transmission of monetary policy actions to lending and deposit rates has quickened in the current tightening phase, beginning May 2022.
According to him, the weighted average lending rates (WALRs) on fresh and outstanding rupee loans have increased by 117 bps and 63 bps, respectively, during the period May to October 2022.
On the deposit side, the weighted average domestic term deposit rate on fresh and outstanding deposits increased by 150 bps and 46 bps, respectively, during the same period.
Das said that the RBI is keeping a close watch on this process of transmission.
The Monetary policy committee of the RBI increased the repo rate by 35 basis points -- fifth time since May 2022 – taking the benchmark lending rate to 6.25%. The repo rate has been increased by 2.25 percentage points since May this year.