• UGI USER
  • Jun 03, 2024
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“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%).