Monetary Policy

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Signalling optimism

Signalling optimism Context: Latest Monetary policy review. Latest review: The Monetary Policy Committee (MPC) has voted to keep policy interest rates unchanged and has stated that it would continue with the accommodative stance at least through the end of the current financial year. An accommodative stance means that the central bank will cut rates to inject money into the financial system whenever needed. This is often employed to expand the overall money supply to boost

The RBI tunes in to the economy

The RBI tunes in to the economy Context: The article analyzes how the COVID-19-triggered recession had led to some of the strongly held economic assumptions being revised around the world. US Federal Reserve: The chairman of the Federal Reserve (Fed) of the US, has declared that the Fed will not let inflation stand in the way of maximising employment implying that it will no longer raise rates pre-emptively(in anticipation of inflation). The reasoning seems to be that the P

International Monetary Fund (IMF) Quota

International Monetary Fund (IMF) executive board approves 50% quota increase to strengthen resources following the guidance from the International Monetary and Financial Committee (IMFC) at the 2023 annual meetings. Quotas are the building blocks of the IMF’s financial and governance structure which are denominated in Special Drawing Rights (SDRs), the IMF’s unit of account. Reflection – An individual member country’s quota broadly reflects its relative

Dollarization- Converting currency into DOLLAR

It is the process by which a country decides to use two currencies the local currency and generally a stronger, more established currency like the US dollar. Javier Milei, the recent winner of Argentina’s presidential election, has drawn attention for his plan to replace the country’s currency “Peso” with the dollar. Occurrence- It occurs in developing countries with a weak central monetary authority or an unstable economic

Outcomes of Monetary Policy Committee Meeting

The Monetary Policy Committee (MPC) of the RBI unanimously decided to keep the repo rate unchanged at 6.5%. The standing deposit facility (SDF) rate remains at 6.25% and the marginal standing facility (MSF) rate and the bank rate at 6.75%.