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RBI Liquidity Boost Expected Before April 2025 Policy

8 April 20251 min read
ECONOMYRBI LiquidityBoost ExpectedBefore April 2025Policy8 April 2025safalsetu.com

Why in the news

Turmoil from the US tariff move led to expectations that RBI would add liquidity so rate cuts pass through quickly, keeping overnight rates at or below the repo rate.

Key facts

  • The MPC was to announce its decision on Wednesday; a 25 bps cut taking the repo rate to 6% was widely expected.
  • US tariffs of 26% on Indian imports raised growth and inflation worries; global market value fell by $2 trillion, called the worst tariff shock since the Smoot-Hawley Act.
  • Liquidity surplus: about ₹1 lakh crore, reversing earlier deficits. WACR was 6.16%, 9 bps below the repo rate.
Liquidity itemAmount
Durable liquidity since Dec 2024₹6.4 lakh crore
More expected in rest of April₹60,000 crore
RBI dividend expected in May₹2.6 lakh crore

Tools: forex swaps and open market bond purchases. Goldman Sachs expected active short-term liquidity management; Madan Sabnavis said a lower repo is a supportive signal.

Exam angle

  • Expected repo rate: 6%.
  • WACR: overnight call money benchmark.

Test yourself

1. What repo rate was expected after the anticipated 25 bps cut by the MPC in April 2025?

A 25 bps cut was expected to bring the repo rate down to 6%.

2. Which two tools did RBI use to inject ₹6.4 lakh crore of durable liquidity since December 2024?

The notes list forex swaps and open market bond purchases.

3. How much dividend transfer from RBI to the government was expected in May?

A ₹2.6 lakh crore dividend transfer was expected in May.

This topic is part of Daily Current Affairs 8 April 2025 (25 topics).

All topics of the dayDay quizApril 2025

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