• UGI USER
  • Dec 09, 2023
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RBI MONETARY POLICY HIGHLIGHTS

Why in the News?

  • The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) unanimously maintains key interest rates.
Source: BankGyan

Key Highlights:

  • GDP :The MPC raises the GDP growth projection for 2023-24 from 6.5% to 7%.
  • Repo rate : The repo rate remains at 6.5%, offering no immediate relief to borrowers.
  • Inflation : Average inflation forecast retained at 5.4%.

Cautionary note on potential inflation spikes in November and December.

Headline inflation remains volatile, influenced by supply shocks.

  • Food Inflation Impact: Despite moderation in food inflation from double-digit levels in July to 6.2% in October, uncertainties persist.

Factors Influencing Inflation:

  • Potential surge in consumer price index (CPI) inflation due to increased vegetable prices.
  • Monitoring of crop output and concerns over elevated global sugar prices.

About Monetary Policy Committee (MPC):

  • Origin:
    • Enacted under Section 45ZB of the amended RBI Act, 1934, in 2016.
    • Empowers the central government to establish a six-member Monetary Policy Committee (MPC). 
  • Objective: Section 45ZB specifies that the MPC is tasked with determining the Policy Rate to achieve the inflation target.
  • Decision Authority: The decisions made by the Monetary Policy Committee are binding on the Bank. 
  • Composition:
  • The MPC is comprised of six members as outlined in Section 45ZB.
  • Members include the RBI Governor as the ex-officio chairperson, the Deputy Governor in charge of monetary policy, an officer nominated by the Central Board of the Bank, and three individuals appointed by the central government.
  • Appointment Criteria: Persons appointed by the central government must possess “ability, integrity, and standing,” along with knowledge and experience in economics, banking, finance, or monetary policy.