RBI MONETARY POLICY ...6TH JUNE 2025

 RBI MONETARY POLICY ...6TH JUNE 2025

WHAT IS MONETARY POLICY?

Monetary policy is the process by which a country's central bank (like the RBI in India) controls the money supply and interest rates to maintain economic stability and growth

GOALS-

1- CONTROL INFLATION

2-ENSURE ECONOMIC GROWTH 

3-MAINTAIN FINANCIAL STABILITY

4-KEEP UNEMPLOYMENT LOW

KEY TOOLS USED BY RBI TO CONTROL AND MAINTAIN MONETARY POLICY

Repo Rate: The rate at which RBI lends money to banks.

Reverse Repo Rate: The rate at which RBI borrows money from banks.

CRR (Cash Reserve Ratio): Portion of deposits banks must keep with RBI.

SLR (Statutory Liquidity Ratio): Portion of deposits banks must keep in the form of liquid assets.

Open Market Operations (OMO): Buying/selling of government securities by RBI

LET'S DISCUSS WHAT DID RBI ANNOUNCE ON 6TH JUNE AND HOW DOES THE POLICY AFFECT EACH AND EVERY CITIZEN OF THE COUNTRY DIRECTLY. BY THE END OF THE BLOG, I AM SURE THAT YOU WILL COME TO KNOW WHY IS MONETARY POICY SO IMPORTAN TO US AND WHY DOES THE REPO RATE MATTER SO MUCH......

1. THE RBI ANNOUNCED A RATE CUT OF 50 BASIS POINTS THAT IS 0.50%, BRINGING IT DOWN FROM 6.00% TO 5.50%. EVERYONE WAS EXPECTING A 25 BASIS POINTS CUT BUT THIS MOVE WAS QUITE SUPRISING. THIS CUTS AIMS TO MAKE BORROWING CHEAPER FOR BANKS, BUSINESSES AND CUSTOMERS. WHICH WILL IN TURN BOOST THE ECONOMY.

2.THE RBI ALSO ANNOUNCED CUT OF CRR (CASH RESERVE RATIO) FROM 4% TO 3% (100 BASIS POINTS) WHICH IS EXPECTED TO INJECT 2.5LAKH CORER IN THE INDIAN BANKING SYSTEM. THIS WAS A HUGE STEP FROM THE RBI AS THE CRR WAS AT 4% FROM A VERY LONG TIME 

 

MUZHE KYA FARAK PADTA HAI???😏😏

AS THE RBI HAS CUT THE REPO RATE TO 5.5% ANS THE CRR TO 3% THERE WILL BE HUGE MONEY INJECTED IN THE INDIAN ECONOMY. PERSONALLY, WE ALL WILL GET CHEAP LOANS (CAR LOAN, HOME LOAN)
AS THE BANK WILL GET MONEY FOR LOWER INTEREST SO WILL THE CUSTOMERS. BUSINESSES WILL SET UP NEW PROJECTS AND THERE WILL BE HUGE EMPLOYMENT CREATION AND ALL THIS WILL ADD UP TO THE GDP. RIGHT NOW, OUR ECONOMY IS IN EXPANSION MODE AS THE RATE OF INFLATION IS UNDER CONTROL RBI HAS DECIDED TO CUT THE REPE RATE.

CHEERY ON TOP-

THE REPO RATES ARE DECIDED BY THE MONETARY POLICY COMITTEE, WHICH CONSISTS OF 6 PEOPLE. 5 OF THEM THIS TIME VOTED FOR THE REPO CUT OF 50 BASIS POINTS AND ONE OF THEM WAS IN FOR 25 BASIS POINTS.

STOCK MARKET REACTION -

AS YOU CAN SEE TODAY 

- NIFTY50: UP BY 1.02%

- SENSEX: UP BY 0.91%

- BANK NIFTY: UP BY 1.47%

BANKS STOCKS WERE UP BY A SIGNIFICANT NUMBER. AMD THE OVERALL SENTIMENT OF THE MARKET WAS POSITIVE. 

THE MAJOR AREAS THAT WILL DIRECTY BE POSITIVELY IMPACTED BY THE POLICY ARE THE BANKING SECTOR AUTOMOBILE SECTOR AND THE REAL ESTATE SECTOR. 

DUE TO THE PLICY WE MIGHT SEE THR RUPEE VALUE WEAKINING A BIT BUT THIS WILL BE A TEMPORARY EFFECT.