RBI MPC: Repo rate held at 5.25%; Governor announces measures to boost forex inflows and reserves

📌 Summary:

• RBI's Monetary Policy Committee held the repo rate at 5.25% and kept its stance unchanged, citing inflation pressures driven by global supply-side shocks rather than domestic overheating
• Governor announced a package to attract foreign capital and shore up forex reserves/the rupee: (1) Fully Accessible Route (FAR) expanded to include all new 15-, 30- and 40-year G-sec issuances; short-term, concentration and individual-security limits on FPI under the General Route removed (2) Higher limits for NRIs/OCIs in stock-market equity without SEBI registration; facility extended to all Persons Resident Outside India (PROIs) at par (3) Concessional forex swap facility (till Sept 30, 2026) to incentivise External Commercial Borrowings (ECBs) by PSUs; full hedging-cost support for banks mobilising 3–5 year FCNR(B) deposits
• The rupee rose 50 paise to 95.24/USD after the FPI liberalisation in G-secs
• Analysts read the policy as "nimble," prioritising macro stability; some expect rate hikes from October if inflation persists

🎯 UPSC Relevance: GS3 Economy — monetary policy transmission, external sector management, capital flows (FPI/FCNR/ECB), exchange-rate stability amid global oil shocks.

📝 Prelims Facts:

• Repo rate held at 5.25% (June 5, 2026 policy)
• FAR allows non-residents to invest in specified G-secs without quantitative limits
• FCNR(B): Foreign Currency Non-Resident (Bank) deposits; ECB: External Commercial Borrowing
• MPC is a 6-member body; repo rate is the rate at which RBI lends to commercial banks

🔑 Key Term: Fully Accessible Route (FAR) — a channel allowing eligible foreign investors unrestricted access to specified government securities.