Repo Rate and Monetary Policy Transmission
The repo rate is the interest rate at which the RBI lends short-term funds to commercial banks against government securities under the Liquidity Adjustment Facility (LAF). It is the primary instrument of monetary policy used by the MPC. Changes in the repo rate are intended to transmit through the banking system to influence lending rates, credit growth, and aggregate demand.
- Current repo rate: 5.25% (unchanged since the February 2026 meeting)
- Standing Deposit Facility (SDF) rate: 25 basis points below the repo rate
- Marginal Standing Facility (MSF) rate: 25 basis points above the repo rate
- Transmission mechanism: Repo rate → banks' cost of funds → MCLR/external benchmark rates → lending rates → aggregate demand → inflation
- External benchmark lending rate (EBLR) system introduced in October 2019 for faster transmission
● Tracked since February 20, 2026 · last seen July 02, 2026 · updates as the daily brief publishes
See it in today’s brief.
Daily current affairs with every static concept explained in place.
Read the daily brief