RBI Monetary Policy and Economy Current Affairs 2026 Notes for SSC Exams

RBI monetary policy and economy current affairs are asked in every SSC exam in the form of direct questions: What is the repo rate now? Who is the RBI Governor? How many members are there in the MPC? What is the fiscal deficit target of the Budget? These RBI monetary policy and economy current affairs 2026 notes for SSC give you the latest decisions, the meaning of every policy tool, the Budget numbers and the basic banking and economic terms in simple tables, followed by 20 practice questions. Read them with the Union Budget 2026-27 Highlights Notes, Important Government Schemes Notes and India Rankings and Indices 2026 Notes notes.

What Is the RBI and What Does It Do?

• The Reserve Bank of India (RBI) is the central bank of India. It was set up on 1 April 1935 under the RBI Act, 1934, and was nationalised on 1 January 1949. Its headquarters is in Mumbai.
• The RBI issues the currency notes (except the one-rupee note, which is issued by the Ministry of Finance), controls the money supply and the credit, regulates the banks and works as the banker of the government and the banker of the banks.
• The present Governor is Sanjay Malhotra, who took charge as the 26th Governor in December 2024.
• The monetary policy is decided by the Monetary Policy Committee (MPC), which was made a statutory body in 2016. It has 6 members: 3 from the RBI (including the Governor as the chairperson) and 3 external members appointed by the Government. The decisions are made by majority.
• India follows flexible inflation targeting: the target of CPI inflation is 4 percent with a tolerance band of 2 to 6 percent.
• The MPC meets at least four times a year; usually it has six meetings (February, April, June, August, October and December).

Repo Rate Timeline: Latest Decisions

• After the October 2026 decision, as per reports, the SDF rate is 5.25 percent and the MSF rate and the Bank Rate are 5.75 percent.
• The RBI projections for 2026-27 (FY27) reported after the October 2026 policy: real GDP growth of 7.1 percent and CPI inflation of 5.2 percent.
• The risks mentioned by the RBI: tensions in West Asia, crude oil price, an uneven south-west monsoon and uncertainty in global trade.
• Because policy decisions change in every meeting, check the latest MPC decision in the news before your exam.

Monetary Policy Tools in Simple Words

Easy memory trick: To control the inflation, the RBI raises the repo rate, the CRR and the SLR, and sells the securities (tight money). To increase the growth, it cuts the rates and buys the securities (cheap money).

Union Budget 2026-27: Key Numbers to Remember

For the full details of the Budget, read the Union Budget 2026-27 Highlights Notes note. Remember that the Budget is presented under Article 112 of the Constitution, and the Economic Survey is presented a day before the Budget.

GST and Taxation: Latest Facts

• GST (Goods and Services Tax) came into force on 1 July 2017 through the 101st Constitutional Amendment. The GST Council is headed by the Union Finance Minister.
• From 22 September 2025, the GST rates were simplified (the so-called GST 2.0): the main slabs are now 5 percent and 18 percent, with a special higher rate (40 percent) on a few luxury and sin goods; earlier there were four slabs of 5, 12, 18 and 28 percent. Check the latest rates before your exam.
• Direct taxes (income tax and corporate tax) are collected by the CBDT; indirect taxes (GST and customs) by the CBIC.
• The new Income Tax Act, 2025 replaces the Income-tax Act of 1961 from 1 April 2026.
• The 16th Finance Commission (chairman Arvind Panagariya) gives its recommendations for the period from 2026-27 to 2030-31.

Banking and Payments Terms

Economic Indicators and Terms (Quick Glossary)

Economy Terms Linked with Current Affairs

• NITI Aayog replaced the Planning Commission on 1 January 2015; the Prime Minister is its chairperson.
• The Economic Survey is prepared by the Chief Economic Adviser and is presented before the Budget.
• MSP (Minimum Support Price) is announced for the crops by the Government on the recommendation of the CACP.
• SEBI regulates the securities market and IRDAI the insurance; PFRDA the pension funds.
• The Reserve Bank Innovation Hub and the RBI Retail Direct scheme are the new initiatives of the RBI.
• See the Important Government Schemes Notes note for the government schemes of the economy and the India Rankings and Indices 2026 Notes note for the economic indices.

Important Questions Explained

Question 1: Who is the Governor of the Reserve Bank of India?
Answer: Sanjay Malhotra, the 26th Governor, who took charge in December 2024.

Question 2: How many members are there in the Monetary Policy Committee?
Answer: Six members: three from the RBI (including the Governor as the chairperson) and three external members.

Question 3: What is the inflation target of the RBI?
Answer: 4 percent CPI inflation with a tolerance band of 2 to 6 percent.

Question 4: What happens to the loans when the repo rate is raised?
Answer: The loans become costlier, the borrowing falls and the inflation is controlled.

Question 5: What is the fiscal deficit target of the Union Budget 2026-27?
Answer: 4.3 percent of GDP.

Question 6: Which Act replaces the Income-tax Act of 1961 from 1 April 2026?
Answer: The Income Tax Act, 2025.

Question 7: When did the RBI start working?
Answer: On 1 April 1935; it was nationalised on 1 January 1949.

Quick Tips to Remember

• Learn the tools as pairs: repo with lending to the banks, reverse repo or SDF with borrowing from the banks, and CRR and SLR with reserves.
• Remember the corridor: SDF is 0.25 below the repo rate and MSF is 0.25 above it.
• Remember that the MPC has six members and the Governor has the casting vote in a tie.
• Write the Budget numbers on one page: fiscal deficit 4.3 percent, capex Rs 12.2 lakh crore.
• Read the RBI policy news in the first week of the policy month (February, April, June, August, October and December).
• Link every economic term with its formula or definition, such as the fiscal deficit.

Common Mistakes to Avoid

• Mixing the repo rate (RBI lends) with the reverse repo (RBI borrows).
• Thinking that the repo rate rises to boost the growth (it rises to control the inflation).
• Confusing CRR (cash with the RBI) with SLR (gold, cash and the securities with the bank).
• Writing the wrong number of MPC members.
• Not checking the latest policy date and the rate in the news.

Quick Revision Points

• RBI: 1 April 1935; Mumbai; Governor Sanjay Malhotra.
• MPC: 6 members; inflation target 4 percent (2 to 6 percent band).
• Repo cycle: 6.50, 6.25, 6.00, 5.50, 5.25 and then 5.50 (October 2026, as per reports).
• SDF = repo - 0.25; MSF and Bank Rate = repo + 0.25.
• Budget 2026-27: fiscal deficit 4.3 percent; capex Rs 12.2 lakh crore; Income Tax Act 2025 from 1 April 2026.
• GST: 1 July 2017; the rates simplified on 22 September 2025.

Practice Questions With Answers

1. Who is the Governor of the RBI?
   Answer: Sanjay Malhotra (26th Governor).
2. Where is the headquarters of the RBI?
   Answer: Mumbai (Central bank).
3. In which year was the RBI established?
   Answer: 1935 (1 April).
4. How many members does the MPC have?
   Answer: Six (3 RBI + 3 external).
5. What is the inflation target of the RBI?
   Answer: 4 percent (2 to 6 percent band).
6. What is the rate at which the RBI lends to the banks called?
   Answer: Repo rate (Short-term).
7. Which rate is the floor of the rate corridor?
   Answer: SDF rate (Standing Deposit Facility).
8. Which rate is the ceiling of the rate corridor?
   Answer: MSF rate (Marginal Standing Facility).
9. What is the part of deposits kept by the banks with the RBI in cash?
   Answer: CRR (Cash Reserve Ratio).
10. What is the part of deposits kept in gold, cash and the securities?
    Answer: SLR (Statutory Liquidity Ratio).
11. What does the RBI do to control the inflation?
    Answer: Raises the repo rate and the reserve ratios (Tight money).
12. What is the fiscal deficit target for 2026-27?
    Answer: 4.3 percent of GDP (Budget 2026-27).
13. What is the capital expenditure of the Budget 2026-27?
    Answer: Rs 12.2 lakh crore (Record).
14. On which date was the Budget 2026-27 presented?
    Answer: 1 February 2026 (Article 112).
15. Which Act replaces the Income-tax Act of 1961?
    Answer: The Income Tax Act, 2025 (From 1 April 2026).
16. When was GST introduced in India?
    Answer: 1 July 2017 (101st Amendment).
17. What are the main GST slabs after the September 2025 reform?
    Answer: 5 percent and 18 percent (Plus a special higher rate).
18. Which body decides the GST rates?
    Answer: GST Council (Headed by the Finance Minister).
19. What is a loan on which the dues are unpaid for 90 days called?
    Answer: NPA (Non-Performing Asset).
20. Who chairs the 16th Finance Commission?
    Answer: Arvind Panagariya (2026-31).

How to Practise This Topic

1. Make a table of the repo rate decisions with the date and the rate.
2. Learn the tools of the monetary policy with one line each and the direction of their effect.
3. Revise the Budget numbers and the economy terms the next day.
4. Attempt the practice questions without looking at the answers.
5. Read the latest RBI policy news and solve the SSC practice papers and the previous year papers.

Related Notes and Practice

• Union Budget 2026-27 Highlights Notes
• Important Government Schemes Notes
• India Rankings and Indices 2026 Notes
• Who is Who of India 2026 Notes
• All Current Affairs notes
• SSC practice papers

Frequently Asked Questions

What is the repo rate?

The repo rate is the rate at which the RBI lends short-term money to the commercial banks against the government securities. It is the main tool of the monetary policy.

What is the latest repo rate in October 2026?

As per reports of the 7 October 2026 policy, the MPC raised the repo rate by 25 basis points to 5.50 percent and changed its stance to calibrated tightening. Check the latest decision before your exam.

Who is the Governor of the RBI?

Sanjay Malhotra is the Governor of the RBI. He became the 26th Governor in December 2024.

How many members are there in the MPC?

The Monetary Policy Committee has six members: three from the RBI, including the Governor, and three external members.

What is the inflation target of the RBI?

The RBI targets 4 percent CPI inflation with a tolerance band of 2 percent on either side, that is 2 to 6 percent.

What is the difference between CRR and SLR?

CRR is the part of the deposits that the banks keep with the RBI in cash, while SLR is the part that they keep with themselves in gold, cash or the government securities.

What is the fiscal deficit target in the Union Budget 2026-27?

The fiscal deficit target for 2026-27 is 4.3 percent of GDP.

What is the SDF rate?

The Standing Deposit Facility rate is the rate at which the banks can park the extra money with the RBI; it is 25 basis points below the repo rate.

What is the MSF rate?

The Marginal Standing Facility rate is the rate at which the banks borrow extra overnight money from the RBI; it is 25 basis points above the repo rate.

When did GST start in India?

GST started on 1 July 2017, and the rates were simplified into two main slabs of 5 percent and 18 percent from 22 September 2025.

How many questions come from the RBI and the economy in SSC exams?

Usually 2 to 4 questions come from the RBI, banking and economy current affairs in the General Awareness section.

How should I prepare the RBI policy for SSC?

Make a table of the repo rate decisions, learn the meaning of each tool, remember the Budget numbers and read the news of the latest policy meeting.