{"id":6555,"date":"2025-08-25T10:21:57","date_gmt":"2025-08-25T04:51:57","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=6555"},"modified":"2025-08-25T17:22:40","modified_gmt":"2025-08-25T11:52:40","slug":"what-is-the-monetary-policy-committee-mpc","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-the-monetary-policy-committee-mpc\/","title":{"rendered":"Monetary Policy Committee (MPC)"},"content":{"rendered":"<h2><b>Monetary Policy Committee Latest News<\/b><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Reserve Bank of India (RBI) recently appointed Indranil Bhattacharyya, executive director, as a member of the Monetary Policy Committee (MPC).<\/span><\/p>\n<h2><b>About Monetary Policy Committee<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Monetary policy <\/b><span style=\"font-weight: 400;\">refers to the <\/span><b>use of monetary instruments<\/b><span style=\"font-weight: 400;\"> under the control of the central bank to r<\/span><b>egulate magnitudes such as interest rates, money supply, <\/b><span style=\"font-weight: 400;\">and availability of credit with a view to achieving the ultimate objective of economic policy.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>RBI is vested with the responsibility<\/b><span style=\"font-weight: 400;\"> of conducting monetary policy. This responsibility is explicitly mandated <\/span><b>under the Reserve Bank of India Act, 1934.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>primary objective<\/b><span style=\"font-weight: 400;\"> of monetary policy is to<\/span><b> maintain price stability while keeping in mind the objective of growth.<\/b><span style=\"font-weight: 400;\"> Price stability is a necessary precondition to sustainable growth.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In May 2016, the <\/span><b>RBI Act, 1934, was amended <\/b><span style=\"font-weight: 400;\">to provide a <\/span><b>statutory basis<\/b><span style=\"font-weight: 400;\"> for the <\/span><b>implementation of the flexible inflation targeting <\/b><span style=\"font-weight: 400;\">framework.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The amended RBI Act also <\/span><b>provides for the inflation target<\/b><span style=\"font-weight: 400;\"> to be s<\/span><b>et by the government of India, in consultation with the Reserve Bank, <\/b><span style=\"font-weight: 400;\">once in every five years.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>Monetary Policy Committee (MPC) constituted <\/b><span style=\"font-weight: 400;\">by the central government under Section 45ZB <\/span><b>determines the policy interest rate <\/b><span style=\"font-weight: 400;\">required <\/span><b>to achieve the inflation target.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Function<\/b><span style=\"font-weight: 400;\">: The MPC is entrusted with the task of <\/span><b>fixing the benchmark policy rate (repo rate) <\/b><span style=\"font-weight: 400;\">required to contain inflation within the specified target level.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The MPC <\/span><b>replaced <\/b><span style=\"font-weight: 400;\">the previous arrangement of the <\/span><b>Technical Advisory Committee.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><b>Composition<\/b><span style=\"font-weight: 400;\">:<\/span>\n<ul>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">MPC will have <\/span><b>six members: <\/b><span style=\"font-weight: 400;\">the <\/span><b>RBI Governor<\/b><span style=\"font-weight: 400;\"> (Chairperson), the <\/span><b>RBI Deputy Governor in charge of monetary policy<\/b><span style=\"font-weight: 400;\">, one <\/span><b>official nominated by the RBI Board<\/b><span style=\"font-weight: 400;\">, and the <\/span><b>remaining three <\/b><span style=\"font-weight: 400;\">members would <\/span><b>represent the Government of India.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>external members<\/b> <b>hold office<\/b><span style=\"font-weight: 400;\"> for a period of <\/span><b>four years.<\/b><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>quorum <\/b><span style=\"font-weight: 400;\">for a meeting shall be <\/span><b>four Members,<\/b><span style=\"font-weight: 400;\"> at least one of whom shall be the Governor and, in his absence, the Deputy Governor, who is the Member of the MPC.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The MPC<\/span><b> takes decisions based on a majority vote. In case of a tie<\/b><span style=\"font-weight: 400;\">, the <\/span><b>RBI governor<\/b><span style=\"font-weight: 400;\"> will have the second or<\/span><b> casting vote.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>decision <\/b><span style=\"font-weight: 400;\">of the MPC would be <\/span><b>binding on the RBI.<\/b><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\"><span style=\"font-weight: 400;\">RBI\u2019s Monetary Policy Department (MPD) assists the MPC in formulating the monetary policy.<\/span><\/li>\n<li style=\"font-weight: 400; text-align: justify;\" aria-level=\"1\">The MPC is required to <b style=\"font-size: inherit;\">meet at least four times in a year.<\/b><\/li>\n<\/ul>\n<p><b>Source<\/b><span style=\"font-weight: 400;\">: <\/span><a href=\"https:\/\/www.livemint.com\/economy\/rbi-appoints-indranil-bhattacharyya-as-new-mpc-member-ahead-of-october-policy-meeting-who-is-he-11755865211799.html\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">LM<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Monetary Policy Committee is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. Read more about Monetary Policy Committee (MPC), Aim, Functions, Members, Latest News<\/p>\n","protected":false},"author":5,"featured_media":60668,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[2335,21,22,23],"class_list":{"0":"post-6555","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"tag-monetary-policy-committee","9":"tag-prelims-pointers","10":"tag-upsc-current-affairs","11":"tag-upsc-prelims-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=6555"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6555\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/60668"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=6555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=6555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=6555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}