Reserve Bank of India’s Monetary Policy Review

About:

• Since May, the board has now increased the key rate by 225 bps in FY23.
  • A 100 basis points equal one percentage point.
• Retail price inflation in India reduced to 6.77 percent YoY in October 2022 from a five-month high of 7.41 percent in September, 2022.
• However, the fact that it continued to be above the central bank's acceptable limit of 2 to 6 percent for a tenth consecutive period prompted RBI to raise the repo rate for the fifth time.
• Inflation is expected to be 6.7% this year, with CPI inflation for the first quarter of 2023-24 projected at 5% and the second quarter at 5.4% on the assumption of a normal monsoon.
• The central bank’s key committee also marginally lowered the GDP projection to 8% for 2022-23, with the third quarter registering 4.4% growth.
• The rupee has appreciated by 3.2% in real terms even as several other currencies have dropped.

Monetary Policy Committee 

• The Monetary Policy Committee of India is responsible for fixing the policy interest rate, to achieve the objectives of monetary policy.

Composition:

• Three officials of the Reserve Bank of India, with Governor of RBI as Chairperson, ex officio
• Three external members appointed by the Government of India
• The external members hold office for a period of four years.
• Decisions of the MPC are taken on the basis of majority, with Governor having the casting vote in case of a tie.
• The MPC meets least 4 times a year and it publishes its decisions after each such meeting.