Former RBI DG Proposes Using US Fed's FIMA Repo Facility to Stabilise Rupee, Economise Forex Reserves

RBI Holds Repo Rate at 5.25% as CPI Inflation Hits 4.38% in June; Forex Reserves Near $700 Bn

RBI's MPC kept repo rate unchanged at 5.25% for the fourth time, prioritizing growth despite CPI inflation rising to 4.38% in June, above the 4% target. Elevated global crude prices and geopolitical uncertainties are key concerns. The central bank is using tools like dollar-rupee swaps and FCNR(B) deposits to manage liquidity and shore up forex reserves near $700 billion, while the rupee recovers to around ₹95.

US Fed Raises Rates by 25 bps to 3.75-4%, Inflation Stays at 3.4% - Implications for RBI MPC

US Fed raised rates by 25 bps to 3.75-4% as inflation remains high at 3.4%. Trump opposes the hike but central bank independence is key. This signals global tightening ahead of RBI MPC meeting in October, raising chances of rate action in India.

RBI Steps Up Rupee Internationalisation Push: BRICS Task Force, UPI & CBDC for Faster Cross-Border Payments

RBI Governor Sanjay Malhotra announced a renewed push for rupee internationalisation at a FICCI-IBA event. The RBI is exploring faster cross-border payments via UPI linkages, CBDCs, and a BRICS task force. MoUs have been signed with UAE, Mauritius, Maldives, and Indonesia to promote local currency trade, aiming to reduce dollar dependence and strengthen the rupee's global role.

US Fed Hikes Rates to 3.75–4%; RBI MPC Seen Raising Repo Rate to 5.5% in October

The US Federal Reserve has raised the federal funds rate target range by 25 bps to 3.75–4%, its first hike in three years, with all 12 FOMC members voting in favour. With India's CPI inflation at 4.82% in August and price pressures generalising, the RBI's MPC (Oct 5–7) is expected to hike the repo rate by 25 bps to 5.5%. This is a high-yield monetary policy development for Prelims and Mains.

World Bank ED Neelkanth Mishra: India Needs 10% Growth for Full Employment, AI Can Disrupt Education

Neelkanth Mishra, India's Executive Director at the World Bank, argues that India cannot create enough jobs for all at current growth rates, requiring 10% real growth for full employment. He highlights rising inequality as a natural outcome of labour surplus and capital shortage, and advocates democratising access to capital. He also discusses India's energy vulnerability, rupee stability, and the transformative potential of AI in education.

India's Q1 GDP Growth Surprises at 7.8%, Manufacturing at 9.2% Despite West Asia Crisis

India's economy defied expectations with a robust 7.8% real GDP growth in Q1 FY26, led by manufacturing at 9.2% and strong services. However, the RBI's 125 bps rate cuts and a GST cut helped, but headwinds like high oil prices (>$80/bbl), deficient monsoon, and slowing global services demand pose a serious stamina test. For exams, this is a classic 'resilience vs. vulnerability' case study for GS3.

JCRA Upgrades India's Sovereign Rating to A- on 7.7% GDP Growth, NPA Ratio Falls to 1.8%

Japan Credit Rating Agency (JCRA) upgraded India's sovereign rating to A- from BBB+, citing strong economic growth of 7.7% in FY2026, robust private consumption, public investment, and improvements in the banking sector. The upgrade reflects India's sustained growth trajectory and enhanced financial stability, with gross NPA ratio falling to 1.8% due to IBC and RBI supervision.

RBI's Forex Swap Facility Attracts $136.3 Billion, Reserves at Record $729 Billion, Liquidity Surplus Rises

The RBI's measures to boost capital flows have massively exceeded expectations, with $136.3 billion in inflows through the forex swap facility, pushing forex reserves to a record $729 billion. However, this has created a liquidity surplus of Rs 6.7 lakh crore, complicating inflation management and looming rate hike decisions. This is critical for understanding India's external stability and the RBI's monetary policy challenges.