Source: TOI
Context: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is set to begin its meeting in Mumbai, with expectations of a potential rate cut amid efforts to boost consumption-led demand post the Union Budget.
About Monetary Policy Committee (MPC):
- What is MPC?
- The MPC is a statutory body established under the Reserve Bank of India Act, 1934, as amended by the Finance Act, 2016. It is responsible for setting the benchmark policy rate (repo rate) to control inflation within a specified target range.
- Members:
- RBI Governor (Chairperson)
- RBI Deputy Governor in charge of monetary policy
- One official nominated by the RBI Board
- Three external members representing the Government of India
- Tenure:
- External members serve a four-year term.
- RBI Governor and Deputy Governor serve ex-officio.
- Meetings:
- The MPC meets at least four times a year.
- Additional meetings can be convened if necessary.
- Quorum for Decision:
- A minimum of four members is required for a quorum.
- The Governor (or Deputy Governor in their absence) must be present.
- Decisions are made by majority vote; in case of a tie, the Governor has the casting vote.
- Function and Role:
- Primary role: To determine the repo rate to maintain inflation within the target range (currently 4% +/- 2%).
- Replaced the earlier Technical Advisory Committee.
- Decisions are binding on the RBI.
- The RBI’s Monetary Policy Department (MPD) assists the MPC in policy formulation.
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