Monetary Policy Review

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Overview:

The Reserve Bank of India’s Monetary Policy Committee (MPC) recently raised the policy repo rate by 50 basis points (bps) to 5.9%.

About:

  • It raised the repo rate (or the rate at which it lends money to the banking system) by 50 basis points (or 0.5 percentage points). 
  • It has cut India’s GDP growth rate for the current financial year (2022-23) from 7.2% to 7%.
  • The MPC retained the retail inflation projection for the current fiscal year at 6.7%.

 

Monetary Policy Committee

  • The Monetary Policy Committee of India is responsible for fixing the policy interest rate, to achieve the objectives of monetary policy.
  • Composition:
  • Three officials of the Reserve Bank of India, with Governor of RBI as Chairperson, ex officio
  • Three external members appointed by the Government of India
  • The external members hold office for a period of four years.
  • Decisions of the MPC are taken on the basis of majority, with Governor having the casting vote in case of a tie.
  • The MPC meets least 4 times a year and it publishes its decisions after each such meeting.

 


Source : The Hindu