MONETARY POLICY COMMITTEE (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     7th October 2023        
QEP Pocket Notes

Context: The Reserve Bank of India's monetary policy committee recently held the policy repo rate steady at 6.5% for the fourth consecutive meeting, while keeping its 2023-24 GDP growth and inflation forecasts unchanged.


Monetary Policy Committee

  • About: It was established based on the recommendation of the Urjit Patel Committee.
  • Set up: Under Section 45ZB of the RBI Act of 1934 by the Union government.
  • Composition: It is a 6 member committee. There are in total three internal members and three external experts. The RBI Governor and Deputy Governor are also members of the MPC Committee.
  • Objectives: To improve the repo rate, reverse repo rate, liquidity, etc.
  • Instruments of Committee: Repo rate, Reverse Repo rate, Marginal Standing Facility (MSF), Bank Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operations (OMOs)

Repo rate: The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) loans money to commercial banks.

 

Reverse repo rate: Reverse repo is the inverse contract to the repo rate. The reverse repo rate is the rate at which the RBI borrows funds from the country's commercial banks.

QEP Pocket Notes