On April 9th, the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) decided to make a significant monetary adjustment. What action did they take?
Cut the repo rate by 25 basis points to 6%Correct Answer
Increased the reverse repo rate by 25 basis pointsIncorrect Answer
Maintained a neutral monetary policy stanceIncorrect Answer
Decided to absorb more liquidity from the economyIncorrect Answer
Explanation:
The decision was to cut the repo rate by 25 basis points to 6% on April 9th, signaling a shift to an "accommodative" policy stance, unlike maintaining a neutral stance.
Increasing the reverse repo rate or absorbing more liquidity would be contrary to an accommodative approach.
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By: susheel