The six-member statutory body that decides India's policy interest rate to meet the inflation target, the core institution of flexible inflation targeting under the RBI.
- Constituted under the amended RBI Act, 1934, after the 2016 monetary-policy framework agreement; it replaced the earlier system in which the RBI Governor alone set rates.
- It has six members: three from the RBI (the Governor as chairperson, a Deputy Governor, and one RBI officer) and three external members appointed by the central government.
- It sets the concept repo rate by majority vote; in a tie the Governor has a second, casting vote; external members serve a fixed four-year term and are not eligible for re-appointment.
- Its mandate is to keep CPI inflation at 4 percent within a band of 2 to 6 percent; if the target is missed for three consecutive quarters, the RBI must report to the government with reasons and remedies.
- It normally meets at least four times a year and publishes the resolution and minutes; it is the decision-making heart of concept monetary policy.
The MPC's six-member composition (3 RBI plus 3 government), the casting vote, the 4 percent (2 to 6 percent) target and the failure-report rule are very high-frequency facts.
The MPC (sets the policy rate) versus the RBI as a whole (the central bank); three members are external and government-appointed, but the Governor chairs and holds the casting vote.
Six-member statutory body (3 RBI, 3 government) chaired by the Governor; sets the repo rate by majority to keep CPI at 4 percent (band 2 to 6 percent).