The Reserve Bank of India (RBI) Monetary Policy Committee (MPC) is a committee of the central bank of India, which is responsible for setting key policy rates such as the repo rate and reverse repo rate. The MPC was established in 2016, following an amendment to the RBI Act, and replaced the earlier system of the RBI governor being solely responsible for monetary policy decisions.
The MPC is composed of six members, with three members appointed by the central government and the remaining three members appointed by the RBI. The governor of the RBI is also a member of the MPC.
The main objective of the MPC is to maintain price stability and to support economic growth. To achieve this, the MPC meets periodically to review economic and financial developments and to decide on the appropriate level of interest rates.
The MPC sets the repo rate, which is the rate at which banks can borrow money from the RBI, and the reverse repo rate, which is the rate at which the RBI can borrow money from banks. These rates have a significant impact on the economy, as they influence borrowing and lending rates throughout the financial system.
Overall, the RBI Monetary Policy Committee plays a key role in maintaining monetary stability in the Indian economy, and its decisions have a significant impact on the country’s financial markets and overall economic performance.