Reserve Bank raises rates by 50 bps, brings down growth outlook to 7%

#GS-03 Economy, Monetary Policy

About Monetary Policy Committee.

The Monetary Policy Committee (MPC) is created to set the policy interest rates as a part of its monetary policy.
It is headed by the Governor of the Reserve Bank of India (RBI) and has another 5 members out of whom 3 are nominated by the government and the other three will be from RBI.
No government official will be nominated to the MPC.
The government nominees to the MPC will be chosen by a Search-cum-Selection Committee under Cabinet Secretary and consisting of RBI Governor and Economic Affairs Secretary and three experts in the field of economics or banking or finance or monetary policy.
Members of the MPC are appointed for a period of four years and shall not be eligible for reappointment.
Decisions are taken by majority vote with each member having a vote.
It is set up based on the recommendation of the Urjit Patel Committee.
The Monetary Policy Committee (MPC) was set up under Section 45ZB of the RBI Act of 1934 by the Union government.
The Monetary Policy Committee (MPC) is required to meet at least four times a year.
The quorum required for the meeting of the MPC is four members.
Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.
Once every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report.

Monetary policy refers to the policy of the central bank which uses monetary instruments under its control to achieve the goals specified in the Act.
The primary objective of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth.

Repo rate, Reverse Repo rate, Marginal Standing Facility (MSF), Bank Rate, Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Open Market Operations (OMOs)