Context: The Monetary Policy Committee (MPC) of the RBI met recently to discuss the macro-economic measures.

Key highlights of the review meeting

• The committee has kept Repo & Reverse repo rates at the existing levels.
• It has also ensured continued support for the economy’s recovery from Covid-19 by ensuring ample liquidity in the system.
• The committee also projected the real gross domestic product (GDP) growth to be 10.5 per cent in 2021-22.
• The retail investors can now access the primary and secondary government bond market.

About Monetary Policy Committee

• MPC is a six-member committee formed after the amendment in the RBI Act, 1934 through the Finance Act, 2016.

Objective: To maintain price stability and accelerate the growth rate of the economy.

• It determines the policy interest rate required to achieve the inflation target.

The meetings of the MPC are held at least 4 times a year (specifically, at least once every quarter) and it publishes its decisions after each such meeting.

• The current mandate of the committee is to maintain 4% annual inflation until 31 March 2021 with an upper tolerance of 6% and a lower tolerance of 2%.
• The committee is answerable to the Government of India if the inflation exceeds the range prescribed for three consecutive quarters.

Unchanged Policy Rates

• The RBI has kept the repo rate under the Liquidity Adjustment Facility (LAF) unchanged at 4%.
• The reverse repo rate under the LAF remains unchanged at 3.35% and the Marginal Standing Facility (MSF) rate and the Bank Rate at 4.25%.

Composition

• The committee comprises of - three officials of the Reserve Bank of India and three external members nominated by the Government of India.
• Governor of RBI (Ex-officio chairperson)
• Decisions are taken by majority with the Governor having the casting vote in case of a tie.