RBI: Monetary Policy and Monetary Policy Committee, Important Terminology [Repo rate, MSF, LAF, Reverse repo rate ]

Headline : RBI takes offbeat tack to help reverse growth slowdown Details : The News: Telegram: https://t.me/MrunalsEconomy In its monetary policy review, the Monetary Policy Committee of the RBI has decided to cut the repo rate by 35 basis points (bps). In addition, the RBI also announced some measures to boost economic activity. Important Terminologies: RiskContinue reading “RBI: Monetary Policy and Monetary Policy Committee, Important Terminology [Repo rate, MSF, LAF, Reverse repo rate ]”

Monetary Policy Committee

MPC is headed by RBI governor, is a six-member panel, of which three members are from RBI and three are independent members selected by government. The independent members are experts in the field of economics, banking or finance. The governor, however, will not enjoy a veto power to overrule the other panel members, but willContinue reading “Monetary Policy Committee”

Liquidity trap

The liquidity trap is the situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid bonds and keep their funds in savings, because of the prevailing belief that interest rates will soon rise. This reduces the Bond yield and makesContinue reading “Liquidity trap”