Monetary policy of India is the Macroeconomic Policy tool used by the Central Bank to Influence Interest Rates, Inflation and Credit Availability through Changes in the Money Supply in the Economy.
Monetary Policy of India : All you need to Know
RBI reviews the monetary policy bi-monthly after the recommendations of Urjit Patel committee. The key instruments used to control the monetary operations are, OMO, CRR, SLR, Bank rate, MSF etc. Monetary policy helps in the management of exchange rate, fighting inflation, boosting investment, supervising the banks etc based on the economic situation of the country. Urjit Patel committee recommended for a five member Monetary Policy Committee(MPC) with RBI Governor as its chair person.
On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided to:
- keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.75 per cent;
- keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and time liability (NDTL);
- continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions; and
- continue with daily variable rate repos and reverse repos to smooth liquidity.
A concise 5 page eBook with all the relevant information required for competitive Exams. Will Cover topics like:
- Monetary Policy Objectives
- Monetary Policy Tools
- Description of tools like Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Liquidity Adjustment Facility (LAF), Repo Rate, Reverse Repo Rate, Marginal Standing Facility (MSF), Market Stabilisation Scheme (MSS) etc
- Important Recommendations of Urjit Patel Committee
- Latest Bi-Monthly Monetary Policy Statement