Repo Rate cut by the Reserve Bank of India (RBI) The RBI’s Monetary Policy Committee (MPC) has cut the repo rate by 25 bps, bringing it down to 5.25%. Marginal Standing Facility (MSF) rate and Bank Rate adjusted to 5.5%. In Q2 2025–26, average headline inflation fell to 1.7%, below the 2% lower tolerance level of the RBI’s flexible inflation-targeting (FIT) framework. About Repo Rate Repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities. It is a monetary policy tool used to control liquidity, inflation, and credit flow in the economy. Impact on Borrowing Costs: Higher repo rate → Costlier loans for banks → Higher interest rates for consumers & businesses → Slower borrowing & spending. Lower repo rate → Cheaper loans for banks → Lower interest rates for borrowers → Increased borrowing & spending. Open Market Operations RBI to conduct OMO purchases of ₹1 lakh crore in government securities (G-Secs) to inject durable liquidity. About Open Market Operations Open Market Operations (OMOs) are market operations conducted by RBI by way of sale/purchase of government securities to/from the market with an objective to adjust the rupee liquidity conditions in the market on a durable basis. If there is excess liquidity, RBI resorts to sale of securities and sucks out the rupee liquidity. Similarly, when the liquidity conditions are tight, RBI buys securities from the market, thereby releasing liquidity into the market. It is one of the quantitative (to regulate or control the total volume of money) monetary policy tools which is employed by the central bank of a country to control the money supply in the economy. Sugar production India's sugar production has increased by 43 percent in the first two months of the current 2025-26…
