A thread with charts on monetary policy rates and ratios in India and USA over time, from in-class discussions of our Macro course. @CafeEconomics @mostlyeconomics @wparag @Sabya_K
Cash reserve ratios (CRR) (related with the cash that banks are legally required to keep with RBI) in India were low to begin with, steadily rose till 1991 (with steep hikes in 1973 and 1989) and then fell rapidly fell (with brief interlude in 2007-08) to 4% today. 
The decline in cash reserve ratio is one of the reasons why the money multiplier in India has risen in the past two decades i.e. more money 'created' in the monetary system.
The Statutory Liquidity Ratio (SLR) follows a similar path of CRR, reflecting how the govt. forced banks to hold its debt, over time. First steep hike in 1964, then consistent rise since 1970 (post-bank-nationalization) peaking in 1991-92, big cut in 1997; consistent fall later.
The repo rate (RBI's lending rate to banks) and reverse repo rate (RBI's borrowing rate) are core monetary policy tools that swing with the business cycle; since 2001, repo rates peaked in Sep 2008 (financial crisis), after which there was a big cut. Rates corridor also narrowed.
Repo rate-reverse repo rate corridor guide the inter-bank lending rates, which are therefore more tightly bound within a smaller corridor today.
But monetary policy transmission can be asymmetric. When repo rates go up, it passes on to higher final lending rates by commercial banks. When repo rates go down, final lending rates may be slow to adjust (as banks can profit!). Chart shows SBI prime lending rate vs repo rate.
In the USA, almost all recessions saw substantial interest rate cuts within the recessionary period. Interest rates of last decade are at historic lows.
USA monetary policy transmission on yields is of course, interesting with narrowing spreads over the past decade.
