10 Terms RBI uses
during their monetary
policy briefings
The Reserve Bank of India (RBI) releases monetary policy updates in line with its bimonthly meetings. These often include terms a layperson may not be familiar with.
Here’s a list of jargon and technical terms one might encounter while going through these policy updates:
Weighted average call rate
is the interest rate on short-term loans that banks offer to brokers, who in turn lend money to investors to fund margin accounts. This type of loan does not have a defined repayment schedule; brokers and investors must repay it on demand.
Liquidity injection
is when the RBI gives a short-term loan to a member institution.
Trade deficit
occurs when a country’s imports exceed its exports. It involves an outflow of domestic currency to foreign markets that is not complemented by matching export income.
Gross Domestic Product (GDP)
is a monetary measure of the market value of all the final goods and services produced in a period, often annually or quarterly. It indicates the economic performance of an entire country or region and is often used to make international comparisons.
Gross fixed capital formation
refers to the net increase in physical assets within a specific period. It does not include the depreciation of fixed capital and also does not consider land purchases.
Gross value added
is a productivity metric that measures the contribution of an entity to an economy, producer, sector, or region.
Index of industrial production
indicates the growth of various industrial sectors in an economy, such as mining, oil, electricity, and manufacturing.
Government final consumption expenditure
is the total transaction amount on a country’s national income accounts; it represents the government’s expenditure on goods and services that are used for individual consumption or the collective needs of members of the community (i.e., collective consumption).
Repo rate
is the rate at which the RBI lends money to commercial banks. The RBI and other monetary authorities use this rate to control inflation.
Reverse repo rate
is the rate at which the RBI borrows money from commercial banks. This rate can be used to control the supply of money in the country.