RBI Hikes Repo Rate by 25 bps to 5.50%: Monetary Policy & Inflation Control

With the aim of controlling inflation, the Reserve Bank's Monetary Policy Committee (MPC) meeting decided to increase the repo rate by 25 basis points (0.25%) from 5.25% to 5.50%.

This unanimous decision was taken at the 6-member Monetary Policy Committee meeting chaired by Reserve Bank Governor Sanjay Malhotra.

📚 School Textbook Link: 12th Standard / 11th Standard · Economics · 12th Economics: Chapter 5 (Monetary Economics) & Chapter 6 (Banking) · Reserve Bank of India (RBI), Monetary Policy Instruments & Inflation Control

🎯 TNPSC Exam Key Notes:

• Repo Rate: The interest rate at which the Reserve Bank provides short-term loans to commercial banks (currently 5.50%).
• Reserve Bank of India (RBI): Based on the recommendations of the Hilton Young Commission, the RBI Act 1934 was enacted, and it was commenced on April 1, 1935.
• Year of nationalization of Reserve Bank: January 1, 1949.
• Monetary Policy Committee (MPC): A 6-member committee; Chairman: Governor of the Reserve Bank (has Casting Vote power).
• Retail Inflation (CPI Inflation Target): The inflation target based on the Consumer Price Index is 4% (+/- 2% tolerance band, i.e., 2% to 6%).

📌 KEY FOR TNPSC:

• Origin of Reserve Bank: April 1, 1935 (Hilton Young Commission).
• Monetary Policy Committee (MPC): 6 members (Inflation Target: 4% ± 2%).