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RBI Monetary Policy Meeting: The meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is starting today, on 4th February. This meeting will continue till February 6 and all decisions will be announced on the same day. According to experts, there is little possibility of interest rate cut in this meeting. In the last meeting held in December, the repo rate was reduced by 0.25% to 5.25%. This year the repo rate has been cut four times, with a total cut of 1.25%.

In the February meeting, RBI had reduced the interest rates from 6.5% to 6.25%. This cut was made by the Monetary Policy Committee after about 5 years. In the second meeting held in April, the interest rate was again reduced by 0.25%. In June, rates were cut for the third time by 0.50%. After this, a cut of 0.25% was made in December. Overall, the Monetary Policy Committee has cut interest rates by 1.25% in four installments.

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Why does the Reserve Bank increase and decrease the repo rate?

RBI Monetary Policy Meeting: Any central bank has a powerful weapon in the form of policy rate to deal with inflation. When inflation is very high, the Central Bank tries to reduce the flow of money in the economy by increasing the policy rate.

Due to high policy rate, it becomes expensive for commercial banks to take loan from the Central Bank. In return, banks make loans costlier for their customers. This reduces the flow of money in the economy. Due to reduced flow of money, demand reduces and inflation decreases.

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RBI Monetary Policy Meeting: Similarly, when the economy is going through a recession, there is a need to increase the flow of money for recovery. In such a situation, the Central Bank reduces the policy rate. This makes it cheaper for banks to take loans from the Central Bank. Customers also get loans at cheap rates. RBI meetings are held every two months.

There are 6 members in the Monetary Policy Committee. Of these, three belong to RBI, while the rest are appointed by the central government. The Monetary Policy Committee (MPC) of RBI meets every two months. The Reserve Bank of India has recently released the schedule of MPC meetings for the financial year 2025-26. A total of six meetings are scheduled in this financial year, and this is the last meeting of the year. The first meeting was held from 7 to 9 April.