RBI unanimously votes to hike policy repo rate by 25 basis points to 5.50%
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Monetary policy and inflation management: a core GS3 topic regarding interest rate dynamics.
Why in news
The RBI Monetary Policy Committee unanimously voted to hike the policy repo rate by 25 basis points to 5.50% to manage monetary variables.
Background
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) decided on a 25 basis point hike. The new policy repo rate stands at 5.50%.
Facts for Prelims
- FactNifty Bank index: Gained over 147 points to reach 55,276.
- FactNifty 50 index: Fell around 100 points to 22,680.
- BodyMonetary Policy Committee (MPC): The body responsible for determining the repo rate.
Prelims practice question
Which body is responsible for determining the repo rate in India?
- (a)Financial Stability Board
- (b)Securities and Exchange Board
- (c)Monetary Policy Committee
- (d)National Development Council
Show answer
Answer: (c) Monetary Policy Committee — The Monetary Policy Committee (MPC) of the Reserve Bank of India is the body responsible for determining the repo rate.
For Mains
Q. Analyze the impact of repo rate hikes on inflation management and capital market volatility in a developing economy like India.
Dimensions to cover in your answer
- Transmission lag: Time gap between RBI rate changes and actual lending rate adjustments by commercial banks
- Liquidity management: Balancing the need to curb inflation while maintaining sufficient credit flow for industrial growth
Keywords: Monetary Policy · Repo Rate · Inflation Targeting · Liquidity Management · Capital Markets
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.