Monetary Policy Explorer
Master the tools used by the RBI to control liquidity and inflation. Understand the quantitative and qualitative measures that drive India's macroeconomic stability.
The MPC Framework
The Monetary Policy Committee (MPC) is a six-member committee constituted by the Central Government (Article 45ZB of the RBI Act). Its primary goal is to maintain price stability while keeping in mind the objective of growth.
The Inflation Target
The target is set at 4% with a tolerance band of +/- 2%. This means the RBI aims to keep inflation between 2% and 6%.
Quantitative Tools
Repo Rate
Rate at which RBI lends to banks. (Current: 6.50%)
Reverse Repo
Rate at which RBI borrows from banks. (Current: 3.35%)
CRR
Cash Reserve Ratio - % of deposits banks must keep with RBI.
SLR
Statutory Liquidity Ratio - % of deposits banks must keep in liquid assets.
Impact Simulator
How does a change in policy rate affect the economy? Explore the transmission effect.
Expansionary (Dovish)
Contractionary (Hawkish)
UPSC Key Term: Open Market Operations (OMO)
OMO refers to the buying and selling of Government Securities (G-Secs) by the RBI in the open market to regulate the money supply.
- Buy G-Secs → RBI gives money → Increases Liquidity
- Sell G-Secs → RBI takes money → Decreases Liquidity