Monetary policy committee(MPC)

Context

It is being announced by MPC that they will meet six times in the financial year 2023.MPC also announced Bi-monthly monetary policy after the deliberations on the prevailing domestic and economic situations.

About

• RBI frames a monetary policy to maintain price stability as a precondition for maintaining sustainable growth in the country.
• The RBI Act was amended in May,2016 to provide a legislative mandate to the central bank to operate the country`s monetary policy framework.
• RBI`s monetary policy framework is aimed at setting the policy rate or repo rate based on an assessment of the current and evolving macroeconomic situation and modulation of liquidity conditions within the market rate.
• As per the amendment in the RBI act,1934, the monetary policy committee was constituted on September 29, 2016, by the central government under amended section 45ZB of the  RBI act.
• It was being constituted with an objective to determine the policy interest rate required to achieve the inflation target.

• It is being stated under section 45ZB that the decision of MPC shall be binding on the bank.

• MPC consists of six members  as

• RBI governor as its ex-officio chairman 

• Deputy governor the in-charge of MPC

• An officer of the bank nominated by the central board

• Three persons appointed by the central government who must be the person of ability ,integrity and standing ,having knowledge and experience in the field of economics or finance or monetary policy as per section 45ZC.