The Functional Role of the Standing Deposit Facility in Inflation Management

Abstract

In the context of controlling inflation within the economic framework, this study examines the fundamental role of the Standing Deposit Facility (STANDING DEPOSIT FACILITY). The investigation centres on the Reserve Bank of India's (RBI) approach and looks into the STANDING DEPOSIT FACILITY's functionality and efficiency in clearing up excess liquidity from the market. The research emphasizes the connection between the RBI's commitment to long-term economic stability and the operational stability of the STANDING DEPOSIT FACILITY through a thorough analysis of inflation patterns and STANDING DEPOSIT FACILITY rates over an extended period of time. The findings make clear how the STANDING DEPOSIT FACILITY influences the control of inflationary pressures and the upkeep of a robust economic environment, underscoring its importance as a tactical instrument in the central bank's monetary policy toolkit.