October 6, 2020 1:48:18 pm
A Reserve Bank of India (RBI) sign is displayed inside the central bank’s headquarters in Mumbai, India, on Thursday, February 6, 2020 (Photographer: Dhiraj Singh / Bloomberg).
With the government appointing three members to the Monetary Policy Committee (MPC), the Reserve Bank of India (RBI) said on Tuesday that its monetary policy committee will now meet October 7-9. “… the next meeting of the Monetary Policy Committee (MPC) is scheduled for October 7-9, 2020, ”he said in a statement.
The government has appointed the eminent economists Ashima Goyal, Jayanth R Varma and Shashanka Bhide as members of the MPC. They will replace Chetan Ghate, Pami Dua and Ravindra Dholakia, who were appointed to the panel for four years on September 29, 2016. Their terms had expired after the previous political meeting on August 6.
The RBI, in an unprecedented development, had postponed the bimonthly MPC meeting on September 28 which was scheduled for Sept. 29-Oct. 1, after the government failed to appoint its three members to the six-member panel in time.
Although the RBI had sought an extension of the external members’ mandate until March due to the Covid situation, it was not accepted by the government as there was no such provision in the RBI Act. It is for the first time in recent history that the RBI had to postpone its monetary policy review.
The MPC is a statutory committee that sets key policy interest rates and the country’s monetary policy stance, as well as the inflation target. The MPC is made up of three external members and three RBI members. The RBI governor heads the MPC, with the lieutenant governor in charge of the Monetary Policy Department and the executive director dealing with policy like the other members of the central bank.
The first meeting of the MPC was held on October 4, 2016 when Urjit Patel was the governor of the RBI. Since then, the MPC has slashed the key policy rate, the buyback rate, by 250 basis points to four percent in the past four years with a reduction of 115 bps in the past nine months. Before October 2016, the RBI governor used to decide the policy rate.
In its last policy meeting on August 6, the MPC kept the Repo rate unchanged at four percent and decided to “continue with the accommodative stance as long as necessary to reactivate growth and mitigate the impact of COVID-19 on the economy, ensuring that inflation remains within the target in the future ”.
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