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New Delhi, 02 October (HS). The Central Government has reconstituted the Monetary Policy Committee (MPC), the policy rate setting body of the Reserve Bank of India (RBI). The three-day review meeting of MPC will be held from October 7 to 9. This time also there is no expectation of change in the policy interest rate repo rate.
According to a notification from the Finance Ministry, Ram Singh, Saugata Bhattacharya and Nagesh Kumar have been appointed as new external members in the RBI's policy rate-setting MPC. The government has notified the reconstitution of the Reserve Bank Monetary Policy Committee under the Reserve Bank of India Act, 1934. These new members have been appointed for four years.
Prof. Director of Delhi School of Economics under the MPC restructuring of RBI. Ram Singh, economist Saugata Bhattacharya and Dr. Nagesh Kumar, director and chief executive of the Institute of Industrial Development Studies, New Delhi, have been made its external members. The MPC that decides the policy rate is headed by Reserve Bank of India Governor Shakit Kant Das.
The first bi-monthly review meeting of the reconstituted Monetary Policy Committee under the chairmanship of RBI Governor Shaktikanta Das is to be held from October 7 to 9. After this meeting, Governor Shaktikanta Das will make the announcement on October 9. The MPC was formed after finalizing the Monetary Policy Framework Agreement in 2016. In this the target of inflation was determined. Under this, RBI has been given the responsibility of keeping inflation at four percent with a variation of two percent.
Economic experts said that the three-day bi-monthly MPC review meeting of RBI under the chairmanship of RBI Governor Shaktikanta Das will run from October 7-9. There is no possibility of change in interest rates in this meeting also. The previous meeting was held in August, in which the MPC did not make any change in the interest rate repo rate for the 9th consecutive time. This time too, there is no expectation of change in the policy interest rates and repo rates.
How many members does MPC have?
As per the provisions of the RBI Act, the Monetary Policy Committee consists of six members. This committee takes decisions on changes in policy interest rates. The committee consists of three members from RBI while three members are appointed by the Central Government. The six-member committee is chaired by the RBI Governor. Its official members include the Deputy Governor in charge of monetary policy in the Reserve Bank, the Executive Director of the Monetary Policy Department and one other officer. Its meeting is held every two months.
What is policy rate i.e. repo rate?
Repo rate is the rate at which the Reserve Bank lends money to commercial banks in case of any shortage. RBI repo rate is used by the monetary authority to control inflation.
RBI last increased the repo rate by 0.25 percent in February 2023, which has now increased to 6.50 percent. The Reserve Bank had reduced the repo rate by 0.40 percent twice between March 27, 2020 and October 9, 2020 during Corona. After this, RBI increased the policy interest rates 5 times. Four times no change was made in it, whereas once in August 2022, it was reduced by 0.50 percent. Before Covid-19, the repo rate was at 5.15 percent on February 6, 2020.
It is noteworthy that at present the external members of the MPC are Dr. Ashima Goyal, member of the Prime Minister's Economic Advisory Council, Shashank Bhide, senior advisor at the National Council for Applied Economic Research and Professor Jayant R Verma of the Indian Institute of Management-Ahmedabad. External members of the newly appointed MPC will replace them.