Monetary Policy Committee (MPC) meeting on Inflation Targeting

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    In News

    • The Reserve Bank of India (RBI) said that it would hold an additional Monetary Policy Committee (MPC) meeting recently.

    Key Points

    • Reason for Additional Meeting: 
      • The RBI has failed to maintain the consumer price index (CPI) inflation target within the 2-6 percent band for three consecutive quarters (January to September 2022)
    • The Regulation 7 of the RBI MPC and Monetary Policy Process Regulations, 2016:
      • States that a separate meeting is required to be scheduled as part of the normal policy process to discuss and draft the report to be sent to the government.
    •  Section 45ZN of the Reserve Bank of India (RBI) Act, 1934: 
      • States that in case the RBI fails to meet the inflation target, it has to present a report to the government explaining the reasons for the failure
      • In the report, the central bank will have to mention the remedial actions it proposes to take.

    About Monetary Policy Committee (MPC)

    • Constituted by: RBI under section 45ZB of the Reserve Bank of India (RBI) Act, 1934.
    • Mission: Fixing the benchmark policy interest rate (repo rate) to restrain inflation within the particular target level (2% to 6%). 
    • Chairman: the Governor of RBI
    • MPC meetings:
      • Currently, the MPC meets six times in a financial year, which is every two months. 
      • The schedule of the MPC meetings for the entire financial year is announced in advance.
      • The monetary policy is published after every meeting with each member explaining his opinions. 

    Source: IE