The Monetary Policy Committee (MPC) is the body of the RBI, headed by the Governor, responsible for taking the important monetary policy decision about setting the repo rate. Repo rate is ‘the policy instrument’ in monetary policy that helps to realize the set inflation target by the RBI (at present 4%).
The MPC replaces the previous arrangement of Technical Advisory Committee.
The MPC was setup after a Memorandum of Understanding between the government and the RBI about the conduct of the new inflation targeting monetary policy framework in February 2015. First meeting of the MPC was held on October 4, 2016 after the Government made amendment of the RBI Act in June 27, 2016. Committee’s meeting also marked the beginning of full-fledged implementation of the new inflation targeting monetary policy framework.
