Last week RBI’s unprecedented announcement of postponement of Monetary policy committee had left investors and bankers in a state of uncertainty which was also reflected in the market. Finally RBI has corrected its course and has constituted the Rate-setting Monetary policy committee. As the pandemic hit Indian economy is in no shape to communicate doubts among the market forces. The MPC should have met by 29th of last month, however due to lack of minimum required strength of 4 members out of the 6 member panel. Worth noting that the RBI act does not contain any provision for postponement of the meeting and this is the first instance when the meeting got delayed.
Today, the appointments committee of the cabinet(AAC), in a meeting chaired by Prime Minister Narendra modi, announced appointment of three new members, Ashima Goyal, Jayanth R Varma and Shashanka Bhide for next 4 years.
It has been instituted by the Central Government of India underneath Section 45ZB of the RBI Act. MPC is entrusted with the responsibility of deciding the different policy related areas including Marginal Standing Facility, Repo Rate, Bank rate, Reverse Repo, and Liquidity Adjustment Facility. The committee meets bimonthly, none of members are government officials, only economists and RBI members forms the panel.
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