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Monetary Policy Committee (MPC) meeting on Inflation Targeting

Posted on October 29, 2022 by admin1  81

In News

  • The Reserve Bank of India (RBI) said that it would hold an additional Monetary Policy Committee (MPC) meeting recently.

Key Points

  • Reason for Additional Meeting: 
    • The RBI has failed to maintain the consumer price index (CPI) inflation target within the 2-6 percent band for three consecutive quarters (January to September 2022)
  • The Regulation 7 of the RBI MPC and Monetary Policy Process Regulations, 2016:
    • States that a separate meeting is required to be scheduled as part of the normal policy process to discuss and draft the report to be sent to the government.
  •  Section 45ZN of the Reserve Bank of India (RBI) Act, 1934: 
    • States that in case the RBI fails to meet the inflation target, it has to present a report to the government explaining the reasons for the failure. 
    • In the report, the central bank will have to mention the remedial actions it proposes to take.

About Monetary Policy Committee (MPC)

  • Constituted by: RBI under section 45ZB of the Reserve Bank of India (RBI) Act, 1934.
  • Mission: Fixing the benchmark policy interest rate (repo rate) to restrain inflation within the particular target level (2% to 6%). 
  • Chairman: the Governor of RBI
  • MPC meetings:
    • Currently, the MPC meets six times in a financial year, which is every two months. 
    • The schedule of the MPC meetings for the entire financial year is announced in advance.
    • The monetary policy is published after every meeting with each member explaining his opinions. 

Source: IE

 
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