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MPC raises repo rate by 25 bps to 5.5% and shifts to calibrated tightening
వార్తల్లో ఎందుకు?
Repo rate up 25 bps to 5.5%, stance now calibrated tightening: the MPC facts GS3 Economy tests
RBI starts a rate-hike cycle and changes its stance to calibrated tightening.
Why it matters: general awareness
What you need to know
2 నిమి
The Monetary Policy Committee raised the repo rate by 25 basis points to 5.5 per cent and changed the policy stance from neutral to calibrated tightening.
The Governor said raising the cash reserve ratio would be among the least preferred ways of withdrawing surplus liquidity.
The MPC has had statutory form since the Finance Act, 2016, and decides the policy rate by majority, with the Governor holding a casting vote.
మూలాలు: Topper IAS editorial (PIB / The Hindu / Indian Express)
ముఖ్య వాస్తవాలు
Remember these
- MPC raised the repo rate by 25 basis points to 5.5 per cent
- Policy stance changed from neutral to calibrated tightening
- MPC has statutory form since the Finance Act, 2016, which amended the RBI Act, 1934
- MPC decides the policy rate by majority; the Governor has a casting vote in a tie
- Governor called a CRR hike among the least preferred tools to withdraw surplus liquidity
ప్రిలిమ్స్ · మెయిన్స్
How the exam will ask it
ప్రిలిమ్స్
- The Monetary Policy Committee decides the policy repo rate by majority vote, and the Governor has a casting vote in case of a tie.
- The MPC was given statutory form through an amendment to the Reserve Bank of India Act, 1934 made by the Finance Act, 2016.
- A stance of 'calibrated tightening' signals that rate hikes or liquidity withdrawal may follow, unlike a 'neutral' stance.
- The Cash Reserve Ratio is the share of a bank's deposits kept with the RBI; raising it withdraws liquidity from the system.
మెయిన్స్
GS3 Economy: monetary policy and inflation management. The statutory MPC uses the repo rate and its policy stance to anchor inflation, while liquidity tools such as CRR are kept as a last resort because they raise banks' costs. The implication is costlier credit and slower demand; the way forward is clear communication and calibrated, data-driven moves that balance price stability with growth.
Quick recall
Answer before you reveal
With reference to the Monetary Policy Committee (MPC) of the Reserve Bank of India, consider the following statements:
- In the event of a tie in voting, the Governor has a casting vote.
- The MPC was given statutory form through an amendment to the Reserve Bank of India Act, 1934 made by the Finance Act, 2016.
Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
సమాధానం చూడండి
సమాధానం: C — Correct: Both 1 and 2 — Both statements hold: the Governor has a casting vote and the Finance Act 2016 gave the MPC statutory form. • 1 only — wrong: Statement 2 is also correct, since the Finance Act 2016 amended the RBI Act to create the statutory MPC, so '1 only' is incomplete. • 2 only — wrong: Statement 1 is also correct because the Governor, as Chairperson, has a casting vote on a tie, so '2 only' is incomplete. • Neither 1 nor 2 — wrong: Both statements are facts about the MPC, so 'neither' cannot be right.
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