Monetary Policy Committee (MPC)

Latest News

• Indranil Bhattacharyya, Executive Director at RBI, has been appointed as a member of the Monetary Policy Committee (MPC).

What is the Monetary Policy Committee (MPC)?

• Role:
  The MPC is responsible for deciding the key policy interest rate (repo rate) that controls inflation to ensure price stability while supporting economic growth.

• Legal Basis:
  Set up under Section 45ZB of the Reserve Bank of India Act, 1934, amended in 2016 to incorporate a flexible inflation targeting framework.

• Inflation Target:
  The government, in consultation with RBI, sets the inflation target every five years. The MPC decides the repo rate needed to achieve this target.

• Function:
  To fix the benchmark policy rate to keep inflation within the target range.

• Composition:

  • Total 6 members:

    • RBI Governor (Chairperson)

    • RBI Deputy Governor (in charge of monetary policy)

    • One official nominated by RBI Board

    • Three members nominated by the Government of India (external experts) with a 4-year term each

  • Quorum: Minimum 4 members (including Governor or Deputy Governor)

• Decision-making:

  • Decisions made by majority voting.

  • RBI Governor holds a casting vote in case of a tie.

  • MPC decisions are binding on the RBI.

• Meetings:
  Must meet at least four times annually.

• Support:
  RBI’s Monetary Policy Department (MPD) assists the MPC in its work.