The RBI on Thursday said it has effectively raised interest rates by 290 basis points and not 250 basis points as it surprised the Street by pausing the tightening cycle.

In saying the effective increase stands at 290 basis points, RBI governor Shaktikanta Das was including the standing deposit facility (SDF) that was introduced in April last year and which replaced the fixed reverse repo rate as the floor of the liquidity adjustment facility (LAF) corridor.

When the RBI introduced SDF, it has not begun the direct interest hikes by pushing the policy repo rate.

Instead, it resorted to an indirect increase as SDF — where banks could park their surplus funds without the RBI having to deposit any collateral in the form of government securities.

SDF came in at 3.75 per cent which was 40 basis points above the fixed rate reverse repo which then stood at 3.35 per cent.

However, from May, the MPC increased the repo rate by 250 basis points on six occasions till the pause after Thursday’s meet.

Das said while it has increased the policy repo rate cumulatively by 250 basis points in the last 11 months beginning May 2022, this was preceded by the introduction of SDF at a rate 40 basis points higher than the fixed rate reverse repo. Therefore, the effective rate hike since April last year has been 290 basis points.