RBI Monetary Policy Committee (MPC)
Six members, one target, at least four meetings a year. Here is how the MPC works, from the RBI Act.
The Monetary Policy Committee (MPC) is the six-member body that decides India's policy repo rate. It exists because of Section 45ZB of the RBI Act, 1934, added when the Act was amended in May 2016 to put flexible inflation targeting on a statutory footing. The first MPC was constituted on 29 September 2016.
Its job is narrow and written into law: set the repo rate needed to meet an inflation target that the Central Government fixes, in consultation with RBI, once every five years. For RBI Grade B, the MPC is a reliable General Awareness topic in Phase 1 and a recurring theme in Phase 2 answers on monetary policy.
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Who Sits on the MPC
Three members come from RBI and three are external. The composition is set by Section 45ZB.
- Governor of RBI
- Chairperson, ex officio.
- Deputy Governor in charge of Monetary Policy
- Member, ex officio.
- One RBI officer nominated by the Central Board
- Member, ex officio.
- Three external members
- Named by the Central Government in the Official Gazette. They hold office for four years or until further orders, whichever is earlier. The current three were notified on 1 October 2024: Dr. Nagesh Kumar, Shri Saugata Bhattacharya and Prof. Ram Singh.
The Inflation Target and Band
Under Section 45ZA the target is set in terms of the Consumer Price Index (CPI). It has been the same in every notification so far: 4% CPI inflation, with an upper tolerance level of 6% and a lower tolerance level of 2%.
5 August 2016
Period covered
5 August 2016 to 31 March 2021
Target and band
4%, band 2% to 6%
31 March 2021 (first review)
Period covered
1 April 2021 to 31 March 2026
Target and band
Retained
25 March 2026 (second review)
Period covered
1 April 2026 to 31 March 2031
Target and band
Retained
| Notified on | Period covered | Target and band |
|---|---|---|
| 5 August 2016 | 5 August 2016 to 31 March 2021 | 4%, band 2% to 6% |
| 31 March 2021 (first review) | 1 April 2021 to 31 March 2026 | Retained |
| 25 March 2026 (second review) | 1 April 2026 to 31 March 2031 | Retained |
What Counts as Failure
The Central Government has notified what failure to meet the target means: average inflation above the upper tolerance level for any three consecutive quarters, or below the lower tolerance level for any three consecutive quarters. A single bad quarter is not a failure.
When RBI fails, it must send a report to the Central Government setting out the reasons, the remedial actions it proposes, and an estimate of how long it will take to bring inflation back to target.
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Meeting Rules
From the RBI Act and the RBI Monetary Policy Committee and Monetary Policy Process Regulations, 2016:
- check_circleThe MPC must meet at least four times a year. The schedule for the whole financial year is announced in advance.
- check_circleQuorum is four members.
- check_circleEach member has one vote. Only when votes are equal does the Governor get a second, casting vote.
- check_circleMembers ordinarily get at least fifteen days' notice of a meeting; an emergency meeting can be called on 24 hours' notice.
- check_circleEach member writes a statement giving the reasons for voting for or against the proposed resolution.
How Decisions Are Published
MPC resolution
When
After every meeting ends
What it contains
The decision on the policy repo rate
Minutes
When
5 pm on the 14th day after the meeting (next working day if a Mumbai holiday)
What it contains
The resolution, each member's vote, and each member's short written statement (Section 45ZL)
Monetary Policy Report
When
Once every six months
What it contains
Inflation in the last six months and the near-term outlook, inflation and growth projections, a review of the economy and the operating procedure, and an assessment of past projections
| Document | When | What it contains |
|---|---|---|
| MPC resolution | After every meeting ends | The decision on the policy repo rate |
| Minutes | 5 pm on the 14th day after the meeting (next working day if a Mumbai holiday) | The resolution, each member's vote, and each member's short written statement (Section 45ZL) |
| Monetary Policy Report | Once every six months | Inflation in the last six months and the near-term outlook, inflation and growth projections, a review of the economy and the operating procedure, and an assessment of past projections |
MPC Meeting Schedule for 2026-27
As published by RBI for the financial year:
| Meeting | Dates |
|---|---|
| 1 | 6, 7 and 8 April 2026 |
| 2 | 3, 4 and 5 June 2026 |
| 3 | 3, 4 and 5 August 2026 |
| 4 | 5, 6 and 7 October 2026 |
| 5 | 2, 3 and 4 December 2026 |
| 6 | 3, 4 and 5 February 2027 |
How the Exam Tests This
Phase 1 General Awareness asks one-line factual MCQs: the section number, the quorum, the casting vote, the day the minutes come out, the target period. The usual traps are mixing up the six members with the quorum of four, saying RBI sets the inflation target (the Central Government does, in consultation with RBI), and calling the Governor's casting vote a veto (it applies only to a tie). In Phase 2, questions on monetary policy reward answers that tie the repo decision back to the 4% target and the 2% to 6% band.
FAQs
How many members are there in the RBI MPC?expand_more
Six: the Governor (chairperson), the Deputy Governor in charge of monetary policy, one RBI officer nominated by the Central Board, and three external members appointed by the Central Government.
What is the inflation target of the MPC?expand_more
4% CPI inflation with a band of 2% to 6%. On 25 March 2026 the Central Government retained it for 1 April 2026 to 31 March 2031.
How often does the MPC meet?expand_more
At least four times a year by law. The 2026-27 schedule has six meetings, from April 2026 to February 2027.
When are MPC minutes released?expand_more
At 5 pm on the 14th day after the meeting. They show the resolution, how each member voted and each member's written reasons.
Which section of the RBI Act deals with the MPC?expand_more
Section 45ZB constitutes the MPC. Section 45ZA covers the inflation target and Section 45ZL the publication of minutes.
Next steps
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