Monetary Policy Committee (MPC)
Why in news?
- After slashing repo rate four times in a row this year to revive growth and investments, the Monetary Policy Committee (MPC) of the Reserve Bank is likely to go for another cut.
Monetary Policy Committee (MPC):
- The Reserve Bank of India Act, 1934 (RBI Act) has been amended by the Finance Act, 2016, to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.
- The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.
- A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions.
- The meetings of the Monetary Policy Committee shall be held at least 4 times a year and it shall publish its decisions after each such meeting.
- It is an executive body of 6 members.
- Of these, three members are from RBI while other three members are nominated by Union Government.
- These Government of India nominees are appointed by the Central Government based on the recommendations of a search cum selection committee chaired by the cabinet secretary.
- The Members of the Monetary Policy Committee appointed by the Central Government shall hold office for a period of four years with immediate effect or until further orders, whichever is earlier.
- The Governor of RBI—Chairperson
- Deputy Governor of the Bank – in charge of Monetary Policy (Member).