RBI’s Monetary Policy Framework and Repo Rate Trends Since 2020
Economy · 22 Aug 2026 · Source: Internet
The Reserve Bank of India has consistently used repo rate adjustments to anchor inflation and support growth, with major policy shifts observed since 2020.
Since March 2020, the RBI cut the repo rate to a record low of 4.00% to mitigate the economic impact of the COVID‑19 pandemic, aiming to boost liquidity and credit flow.
From 2021 onward, the RBI adopted a flexible inflation targeting regime, allowing the repo rate to rise gradually as inflation pressures persisted, reaching 6.50% in early 2023 before stabilising around 6.25%.
The policy stance emphasizes maintaining a 4% inflation target with a tolerance band of ±2%, using tools such as the reverse repo rate, CRR, and open market operations to manage money supply.
These measures directly influence loan pricing, bank profitability, and the overall credit ecosystem, making them crucial for banking examinations.