RBI to announce Monetary Policy Committee’s decision at 2.30 pm on 4 Oct

The Reserve Bank of India (RBI) has decided to change the timing of announcement of its monetary policy review to mid-afternoon from 11 am at present, in view of the new framework under the newly constituted Monetary Policy Committee.

"The resolution of MPC will be placed on the official website of RBI at 2.30 pm on October 4," the central bank said on its website, adding that MPC will be meeting on Monday and also Tuesday to take a call on rates.

The government, meanwhile, notified the constitution of the Monetary Policy Committee under the amended Reserve Bank of India Act, 1934.

The finance ministry has amended the Reserve Bank of India Act, 1934 (RBI Act) by the Finance Act, 2016,  to provide for a statutory and institutionalised framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth.

The Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. A Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions. The meetings of the Monetary Policy Committee shall be held at least 4 times a year and it shall publish its decisions after each such meeting.

The provisions of the RBI Act relating to Monetary Policy have been brought into force through a Notification in the Gazette of India Extraordinary on 27 June 2016. The factors constituting failure to meet inflation target under the Monetary Policy Committee Framework have also been notified in the Gazette on 27 June 2016. The government, in consultation with RBI, has notified the inflation target in the Gazette of India Extraordinary dated 5 August 2016 for the period  beginning from the date of publication of this notification and ending on 31 March 2021, as under:-

Inflation Target               :             Four per cent.

Upper tolerance level     :             Six per cent.

Lower tolerance level     :             Two per cent.

As per the provisions of the RBI Act, out of the six members of Monetary Policy Committee, three members will be from the RBI and the other three members of MPC will be appointed by the central government. In exercise of the powers conferred by section 45ZB of the Reserve Bank of India Act, 1934, the central government has accordingly constituted, through a Gazette Notification dated 29 September 2016, the Monetary Policy Committee of RBI, with the following composition, namely:-

RBI governor will be ex-officio chairperson of the MPC while the deputy governor of the RBI, in charge of monetary policy  and one officer of the RBI to be nominated by the Central Board will be the other ex-officio members while Chetan Ghate (Professor, Indian Statistical Institute), Pami Dua (Director, Delhi School of Economics) and Ravindra H Dholakia (Professor, Indian Institute of Management (IIM),  Ahmedabad) will be the central government nominees to the MPC.

The members of the Monetary Policy Committee appointed by the central government shall hold office for a period of four years, with immediate effect or until further orders, whichever is earlier.