The central bank tinkers with these five rates when it wants to affect the liquidity in the economy or control inflation.
What are the key rates the RBI uses?
The monetary policy is formulated, announced and reviewed by the central bank of the country; in India's case – the Reserve Bank of India, or RBI.To accomplish its monetary goals, the central bank can resort to various measures. A common one is Open Market Operations, or OMO. This is an activity by a central bank to buy or sell government bonds on the open market.Central banks also tinker will certain policy rates to impact the liquidity in the system and affect inflation.