What is the common examiner trap about Economy in UPSC exams?

They will ask which rate was changed, swapping 'repo rate' with 'reverse repo', 'SDF', or 'MSF'. Another trap is asking about the vote (e.g., 5:1 majority) when it was unanimous. They may also ask about the primary risk cited, offering options like 'domestic demand' or 'monsoon' instead of the correct 'West Asia conflict'.

What should UPSC aspirants remember about Economy for Prelims?

1. Target this Data: Repo Rate = 5.25%; SDF = 5%; MSF & Bank Rate = 5.50% 2. Target this Nodal Body: Monetary Policy Committee (MPC) of RBI 3. Target this Legal Point: Policy set under the Liquidity Adjustment Facility (LAF) framework

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News 19 of 29

RBI MPC Holds Repo Rate at 5.25%, SDF at 5%, MSF & Bank Rate at 5.50% Amid Global Risks

Q: The Monetary Policy Committee (MPC) that sets the repo rate is constituted under which Act?

The Reserve Bank of India Act, 1934, The Monetary Policy Committee (MPC) was constituted under Section 45ZB of the amended Reserve Bank of India Act, 1934. Its primary objective is to maintain price stability while keeping in mind the objective of growth.

Q: Consider the following statements regarding the recent RBI MPC decision: 1. The committee unanimously decided to increase the policy repo rate. 2. The Standing Deposit Facility (SDF) rate was kept unchanged at 5.25%. 3. RBI Governor cited the West Asia conflict as a risk to India's inflation and growth outlook. Which of the statements given above is/are correct?

Only 3, Statement 1 is incorrect as the MPC decided to keep the repo rate unchanged at 5.25%, not increase it. Statement 2 is incorrect because the SDF rate was kept at 5%, not 5.25%. Statement 3 is correct as per the article where Governor Malhotra highlighted the West Asia conflict as a risk.

Q: As per the recent RBI MPC announcement, what is the current Marginal Standing Facility (MSF) rate?

5.50%, The article states that the Marginal Standing Facility (MSF) rate remains at 5.50%. The repo rate is 5.25% and the SDF rate is 5%. The MSF rate is typically set 25 basis points above the repo rate.

Q: What is the primary implication of the RBI MPC's decision to keep the policy repo rate unchanged?

It reflects a pause to assess the impact of past hikes amid persistent global risks., Holding the rate steady suggests the MPC believes the current policy stance is appropriate to manage inflation, allowing time for past rate increases to work through the economy. The mention of global risks like the West Asia conflict supports this cautious, wait-and-watch approach.

EconomyCORE

Target:UPSC GS-IIIMPSCBankingSSC GATeachingPrelims HighMains MediumStatic GK Link

08 Apr 2026

~2 min

Source: The Hindu

Key Data:Repo rate 5.25%SDF rate 5%MSF rate 5.50%Bank Rate 5.50%

Bodies:RBIMPC

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~2 min · Quick mode

What This Article Covers

1.The MPC unanimously decided to keep the policy repo rate unchanged at 5.25%.

2.The Standing Deposit Facility (SDF) rate stays at 5%, while the Marginal Standing Facility (MSF) and Bank Rate remain at 5.50%.

3.Examiners can test the exact rates, the unanimous nature of the vote, and the Governor's cited risks (West Asia conflict).

The Big Picture

Prelims · HighMains · Medium

The RBI Monetary Policy Committee has maintained the status quo on key policy rates, highlighting a balanced approach amid strong domestic economic footing and persistent global risks. This decision is crucial for aspirants as it tests core knowledge of monetary policy tools and the RBI's response to inflation-growth dynamics under external pressures.

Exam Lens

Quick Exam Facts From News

Repo Rate5.25%

SDF Rate5%

MSF & Bank Rate5.50%

MPC DecisionUnanimous

Key Risk CitedWest Asia Conflict

1-Minute Revision

›Repo Rate: 5.25%
›SDF Rate: 5%
›Target this Data: Repo Rate = 5.25%; SDF = 5%; MSF & Bank Rate = 5.50%
›Target this Nodal Body: Monetary Policy Committee (MPC) of RBI
›Target this Legal Point: Policy set under the Liquidity Adjustment Facility (LAF) framework

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News Snapshot

💵

Policy Status Quo

The RBI's MPC voted unanimously to maintain the policy repo rate at 5.25%.

⚖️

Corridor Intact

The SDF rate remains the floor at 5%, and the MSF/Bank Rate stays the ceiling at 5.50%.

🌍

External Risks

Governor flagged the West Asia conflict as a key risk to India's inflation and growth outlook.

Detailed Analysis & Strategic Depth

Context / Background

The RBI uses the Monetary Policy Committee (MPC) framework to set the repo rate, which is the key policy rate influencing all other interest rates in the economy. The decision to hold rates comes after a period of calibrated tightening to manage inflation. The MPC's stance reflects a balance between supporting growth and anchoring inflation expectations, especially when domestic fundamentals are strong.

Core Analysis & Implications

Keeping the repo rate at 5.25% signals a pause in the tightening cycle, suggesting the RBI believes current rates are appropriate to bring inflation towards its 4% target. A unanimous vote indicates strong consensus on the assessment. The unchanged SDF (5%) and MSF/Bank Rate (5.50%) keep the liquidity adjustment facility (LAF) corridor stable, which ensures orderly money market conditions. However, the explicit mention of the West Asia conflict as a risk underscores the RBI's caution regarding potential oil price shocks and global financial volatility.

Future Outlook / Way Forward

The future trajectory will be 'data-dependent', closely monitoring domestic inflation prints, monsoon progress, and global geopolitical developments. If the West Asia conflict escalates, causing sustained high energy prices, it could force the MPC to consider a rate hike in subsequent meetings. Conversely, a sharp domestic growth slowdown could open room for an accommodative pivot later in the year.

Key Facts at a Glance

Repo Rate5.25%

SDF Rate5%

MSF & Bank Rate5.50%

MPC DecisionUnanimous

Key Risk CitedWest Asia Conflict

You've read the full analysis. Now test your understanding.

Practice exam-style questions based on this article.

Q1Static LinkageEasyUPSC, Banking, SSC

The Monetary Policy Committee (MPC) that sets the repo rate is constituted under which Act?

Q2Statement-basedHardUPSC, Banking

Consider the following statements regarding the recent RBI MPC decision:

1. The committee unanimously decided to increase the policy repo rate.

2. The Standing Deposit Facility (SDF) rate was kept unchanged at 5.25%.

3. RBI Governor cited the West Asia conflict as a risk to India's inflation and growth outlook.

Which of the statements given above is/are correct?

Q3Data-centricMediumBanking, SSC, UPSC

As per the recent RBI MPC announcement, what is the current Marginal Standing Facility (MSF) rate?

Q4Application/ImpactMediumUPSC, Banking

What is the primary implication of the RBI MPC's decision to keep the policy repo rate unchanged?

All 25 MCQs ▸

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RBI MPC Holds Repo Rate at 5.25%, SDF at 5%, MSF & Bank Rate at 5.50% Amid Global Risks

Exam Lens

Quick Exam Facts From News

1-Minute Revision

News Snapshot

Policy Status Quo

Corridor Intact

External Risks

Detailed Analysis & Strategic Depth

Context / Background

Core Analysis & Implications

Future Outlook / Way Forward

Prelims Flashpoints

Key Facts at a Glance