Source: LM
Context: The Reserve Bank of India (RBI) nominated its Executive Director Indranil Bhattacharyya as an ex-officio member of the Monetary Policy Committee (MPC).
About Monetary Policy Committee (MPC)
What it is
- The Monetary Policy Committee (MPC) is a statutory body established to set India’s benchmark policy interest rate (repo rate).
- It ensures that monetary policy decisions are transparent, credible, and data-driven.
Established in
- Formed in 2016 under the provisions of the RBI Act, 1934 (amended in 2016).
- Institutionalised inflation targeting framework in India.
Chaired by
- The Governor of RBI serves as the ex-officio Chairperson of the MPC.
Structure of Organisation
- 6 members in total:
- 3 members from the RBI (Governor, Deputy Governor in charge of monetary policy, and one Executive Director).
- 3 external members nominated by the Central Government.
- External members have a four-year term, not eligible for reappointment.
- Decisions are taken by majority vote, with Governor having a casting vote in case of a tie.
- Fixes the repo rate to achieve the inflation target (currently 4% ± 2%).
- Balances price stability with economic growth.
- Reviews monetary policy bi-monthly (six times a year).
- Anchors inflation expectations to boost investment confidence.
Powers
- Decisions of the MPC are binding on RBI.
- Has authority to adjust monetary policy instruments like repo, reverse repo, CRR, and SLR indirectly.
- Strengthens institutional accountability by publishing minutes and voting patterns of each meeting.
