Management Today
Year : 2019, Volume : 9, Issue : 4
First page : ( 243) Last page : ( 250)
Print ISSN : 2230-9764. Online ISSN : 2348-3989.
Article DOI : 10.11127/gmt.2019.12.04

Role of Repo Rate in Indian Monetary Policy Since 2014

Asbe Chetana

Assistant. Professor, N. L. Dalmia Institute of management Studies & Research, Department of Finance, E-mail id: chetana.asbe@nldalmia.edu.in, Contact no.: +91 98195 06263

Online published on 22 January, 2020.

Abstract

The Urjit Patel Committee report (2014) had recommended that repo rate should be made the signal of policy stance to address the issue of high inflationary pressure. Since then repo rate as a tool has gained pronounced importance. The current Indian monetary policy framework aims at setting the policy (repo) rate based on a forward-looking assessment of inflation, growth and other macroeconomic risks. In the current scenario too where India is amid a growth slowdown, to some extent, the monetary policy is expected to address the situation. The purpose of this paper is to analyze the role of repo rate in the conduct of monetary policy since the adoption of flexible inflation targeting by India. It studies if repo rate has allowed RBI to pass on interest rate signals to the market for the period into consideration. It concludes that there is further scope for improving the signaling of change in stance and adequately transmitting the rate cuts for an augmented monetary policy transmission mechanism.

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Keywords

Reserve Bank of India (RBI), monetary policy, repo rate, weighted average call money rate, lending rate, deposit rate, consumer price index inflation.

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