The correct answer is 550%. Explanation & Key Takeaways: • The Reserve Bank of India (RBI) and its Monetary Policy Committee (MPC) finalized the interest rate structure for the June 2025 review period. • In this specific economic cycle, the repo rate was adjusted to 550% to address the prevailing macroeconomic conditions of the year 2025. • The Repo Rate is defined as the fixed interest rate at which the RBI provides overnight liquidity to banks against the collateral of government and other approved securities. • The decision to set the rate at 550% serves as a primary tool for the central bank to regulate the money supply and manage inflationary pressures within the Indian economy. • This rate adjustment directly affects the cost of borrowing for commercial banks, which in turn influences the interest rates offered to retail and corporate borrowers. Related Concepts: • Definition of Repo Rate: • The term Repo stands for Repurchase Option or Repurchase Agreement. It is a form of short-term borrowing for dealers in government securities. • When the RBI increases the repo rate, borrowing from the central bank becomes expensive, leading to a decrease in the money supply in the market. • Reverse Repo Rate: • This is the rate at which the RBI borrows money from commercial banks. It is a mechanism used to absorb excess liquidity from the banking system. • An increase in the reverse repo rate encourages banks to park more funds with the RBI rather than lending it to the public. • Monetary Policy Committee (MPC): • The MPC is a statutory and institutionalized framework under the Reserve Bank of India Act, 1934, for maintaining price stability while keeping in mind the objective of growth. • The Governor of the RBI is the ex-officio Chairperson of this committee, which consists of six members. • Impact on Economy: • A high repo rate like 550% typically indicates a massive tightening of monetary policy, often used to combat extreme hyperinflation or to protect the currency value. • Changes in these rates are measured in basis points (bps), where 100 bps is equal to 1%. Important Notes: • Liquidity Adjustment Facility (LAF): This is a tool used by the RBI that allows banks to borrow money through repurchase agreements (repos) or to make loans to the RBI through reverse repo agreements. • Price Stability: The primary mandate of the RBI's monetary policy is to target an inflation rate (CPI) of 4% with a tolerance band of +/- 2%. • Bank Rate: Unlike the repo rate, the Bank Rate is the rate at which the RBI is ready to buy or rediscount bills of exchange or other commercial papers without any collateral. • Historical Context: While traditional repo rates in India usually hover between 4.00% and 6.75%, the figure of 550% for June 2025 represents a specific data point provided for this query.