India's No.1 PU & Degree With Integrated IAS & IPS(UPSC/PSC) Training College.
“RBI LIKELY TO MAINTAIN REPO RATE AMID PERSISTENT FOOD INFLATION”
Why in the news?
- The Reserve Bank of India’s Monetary Policy Committee is likely to maintain the repo rate at 6.5% due to persistent food inflation, signaling a cautious approach to monetary policy.
- Expectations suggest the MPC will keep the monetary policy stance unchanged, focusing on managing inflation and supporting economic growth amid uncertainties.
About Monetary policy:
- Central bank’s macroeconomic policy managing money supply and interest rates.
- Purpose: Achieve macroeconomic goals like controlling inflation, boosting consumption, growth, and liquidity.
- Tools: Implemented through open market operations (OMOs), bank rate policy, reserve system, credit control, moral persuasion.
- India’s Monetary Policy: RBI aims to manage money quantity to meet sector requirements and spur economic growth.
source:researchgate
About Monetary Policy Committee (MPC):
- Formed under the RBI Act, 1934, amended in 2016 by the Finance Act.
- Purpose: Fix benchmark interest rate, enhance transparency and accountability in monetary policy
- Composition: Six members – three RBI officials, three external members appointed by the Government of India (GoI).
- Chairperson: RBI Governor serves as the ex officio chairperson.
- Mandate: Maintain annual consumer price index-based inflation rate of 4% (+/- 2%).
