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Monetary Policy Committee

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Monetary Policy Committee

shape Introduction

Static GK is one of the important section in Government Sector and Bank related Exams. In static GK, Banking is one of the important topic. The article Monetary Policy Committee presents the key points of Monetary Policy Committee. The article Monetary Policy Committee can help the students and aspirants to perform well in the exams like IBPS PO, SO, Clerk, SBI, RRB, etc.

shape MPC

Monetary Policy Committee:

The main objective of the Monetary Policy Committee is to maintain inflation target , set up by the Central Government, in consultation with the RBI, every 5 years .

From RBI side:

    Urjit Patel – RBI Governor

    R Gandhi – RBI Deputy governor

    Michael Patra – Executive Director in charge of monetary policy


From Government side:

    Ravindra Dholakia, Professor of Economics at IIM Ahmedabad

    Chetan Ghate, Associate Professor at Indian Statistical Institute

    Pami Dua, Director, Delhi school of economics


Overview:

  • The Monetary Policy Committee (MPC) is the body of the RBI, headed by the Governer.

  • The main responsibility of the MPC is to set the repo rate.

  • Repo rate is ‘the policy instrument’ in monetary policy that helps to realize the set inflation target by the RBI (at present 4%).

  • The MPC replaces the previous arrangement of Technical Advisory Committee.

  • The MPC was setup after a Memorandum of Understanding between the government and the RBI about the conduct of the new inflation targeting monetary policy framework in February 2015.

  • First meeting of the MPC was held on October 4, 2016 after the Government made amendment of the RBI Act in June 27, 2016.

  • Committee’s meeting also marked the beginning of full-fledged implementation of the new inflation targeting monetary policy framework.


Structure:

  • The MPC has six members .

  • Three of the members are from the RBI while the other three members are appointed by the government.

  • Members from the RBI are the Governor who is the chairman of the MPC, a Deputy Governor and one officer of the RBI.

  • The government members are appointed by the Centre on the recommendations of a search-cum-selection committee which is to be headed by the Cabinet Secretary.

  • The Committee is to meet at least four times a year. There will be no reappointment of the committee.