RBI Reduces Repo Rate to 5.50%
In News
What Happened
Why It Matters
Background
History & Context
What Changed
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Repo Rate: BEFORE this announcement, the policy repo rate was 6.00 percent; NOW it is 5.50 percent, a substantial reduction of 50 basis points.
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Cash Reserve Ratio (CRR): BEFORE this announcement, the CRR stood at 4.0 percent; NOW it is 3.0 percent, effectively releasing a massive amount of liquidity into the banking system.
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Policy Stance: BEFORE this meeting, the RBI maintained an accommodative monetary policy stance; NOW it has shifted to a neutral stance to balance growth support with inflation alignment.
Prelims Angle
NCERT Connection
Practice Questions
Q1
With Reference ToWith reference to the RBI's monetary policy tools, consider the following statements: 1. A reduction in the Cash Reserve Ratio (CRR) increases the lending capacity of commercial banks. 2. A neutral monetary policy stance implies that the RBI is committed to only lowering interest rates in future meetings. Which of the statements given above is/are correct?