What is The RBI’s Monetary Policy Committe

 What is The RBI’s Monetary Policy Committee?Current updates on it

Overview

On Friday left bench mark interest rates unchanged and reiterated that it would retain its accommodative stance for “as long as necessary to re- vive and sustain growth on a durable basis”, as it cut its GDP growth forecast for the fi scal year by 100 basis points to 9.5%.

The RBI’s Monetary Policy Committee, after taking stock of the evolving macro­economic and financial conditions as well as the impact of the second wave of the COVID­19 pandemic, voted unanimously to keep the policy repo rate unchanged at 4%, Governor Shaktikanta Das said.

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (June 4, 2021) decided to:

• keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent.  Consequently, the reverse repo rate under the LAF remains unchanged at 3.35 per cent and the marginal standing facility (MSF) rate and the Bank Rateat 4.25 per cent.

The RBI’s Monetary Policy Committe

Details

The RBI Monetary Policy Committee (MPC) had met on June 2nd, 3rd and 4th and took stock of the evolving macroeconomic and financial conditions and the impact of the second wave of the pandemic.

ØThe MPC voted unanimously to maintain the status quo and keep the policy repo rate unchanged at 4 percent.

ØThe MPC also decided to continue with its accommodative stance as long as necessary to revive and sustain growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

 ØThe RBI has kept the marginal standing facility (MSF) rate and bank rate unchanged at 4.25 percent. The reverse repo rate is also unchanged at 3.35 percent.

The RBI’s Monetary Policy Committe

What is The Monetary Policy

The Monetary Policy Committeeis responsible for fixing the benchmarkinterest rateinIndia. The meetings of the Monetary Policy Committee are held at least 4 times a year (specifically, at least once BIMONTHLY) and it publishes its decisions after each such meeting.

●The committee comprises six members -three officials of theReserve Bank of Indiaand three external members nominated by theGovernment of India.

●They need to observe a "silent period" seven days before and after the rate decision for "utmost confidentiality". TheGovernor of Reserve Bank of Indiais the chairpersonex officioof the committee. Decisions are taken by majority with the Governor having the casting vote in case of a tie. The current mandate of the committee is to maintain 4% annualinflationuntil 31 March 2021 with an upper tolerance of 6% and a lower tolerance of 2%

 

The composition of the current monetary policy committee is as follows:

●Governor of the Reserve Bank of India –Chairperson,ex officio -ShaktikantaDas

●Deputy Governor of the Bank in charge of monetary policy —Michael DebrataPatra

●Executive director of the Bank in charge of monetary policy —M K Saggar

●AshimaGoyalis a member of Prime Minister NarendraModi'seconomic advisory council. MsGoyalis a professor at the Indira Gandhi Institute of Development Research in Mumbai and was a visiting fellow at Yale University.

●ShashankaBhideis a senior advisor at the National Council for Applied Economic Research, a

New Delhi-based think-tank, whose work has involved research into agriculture, poverty analysis and macroeconomics.

●JayanthVarmais a finance and accounting professor at the Indian Institute of Management, Ahmedabad. He was formerly on the board of the country's capital markets' regulator.

●Members referred from 4 to 6 above, will hold office for a period of four years from the date of appointment while the other three members are official. None of the central government nominees are eligible to be re-appointed.