MPC Minutes: Inflation concerns remain in policy review

Last Updated22/04/2024

Price stability has to be restored in order to ensure that the rising growth trajectory in the economy is sustained and economic conditions are not yet ripe to ease the restrictive monetary stance.
Official retail inflation data for March showed food price inflation remained sticky at 8.52%.

Monetary Policy is the process of regulating the supply of money in an economy by the monetary authority of the country.
The Monetary Policy, generally, adjusts the inflation rates or interest rates to sustain the price stability and to maintain the predictable exchange rates with foreign currencies.
Monetary policy is either contractionary or expansionary and is often seen separate from the fiscal policy which deals with taxation, spending by government, and borrowing.
When the total money supply is increased rapidly than normal, it is called an expansionary policy, while a slower increase or even a decrease of the same refers to a contractionary policy.
The Monetary Policy Committee (MPC) was constituted as per Section 45ZB under the RBI Act of 1934 by the Central Government. The first meeting of MPC was conducted on 3rd October 2016 in Mumbai.
The committee determines the policy interest rate required to achieve the inflation target.
The MPC is required to meet at least four times in a year.
The quorum 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 to detail the sources of inflation and the forecasts of inflation for 6-18 months ahead.