MPC starts two days meeting to decide key interest rate

The newly appointed Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel has started its two days meeting (October 3 and 4, 2016) for the fourth bi-monthly monetary policy review for 2016-17. This monetary policy review on October 4 will be the first by the six-member MPC as well as Governor Patel.

Till now, the RBI Governor used to decide on key policy rates, including the repo rate or short-term lending rate. But, this time the all-powerful interest-rate setting panel, whose constitution was notified by the government recently, will take call on interest rate.

Members of the MPC are RBI Governor Urjit Patel; Deputy Governor (in charge of Monetary Policy) R Gandhi; and Executive Director Michael Patra; Chetan Ghate, Professor, Indian Statistical Institute; Pami Dua, Director, Delhi School of Economics; and Ravindra H Dholakia, Professor, Indian Institute of Management, Ahmedabad.

According to the government, a committee-based approach for determining the monetary policy will add lot of value and transparency to monetary policy decisions. The government had in August notified 4 percent inflation target with a range of plus/minus 2 percent for the next five years under the monetary policy framework agreement with the Reserve Bank.