Why is it in the news?

• The Reserve Bank of India’s Monetary Policy Committee (MPC), which is scheduled to meet from June 5 to 7, is expected to keep the repo rate steady at 6.5 per cent as sticky food inflation continues to remain a threat to the inflation.

More about the news:

 Reasons to Keep Repo Rate Unchanged:

 Monetary Policy Committee:

• The Finance Act of 2016 amended the Reserve Bank of India Act, 1934, introducing a statutory framework for the Monetary Policy Committee (MPC).
• According to Section 45ZB of the revised RBI Act, the central government has the authority to establish a six-member MPC.
• The primary function of the MPC is to determine the benchmark policy rate (repo rate) aimed at maintaining inflation within the designated target range.
• Composition: The Monetary Policy Committee (MPC) comprises six members, including the RBI Governor (as Chairperson), the RBI Deputy Governor overseeing monetary policy, one nominee from the RBI Board, and three representatives appointed by the Government of India.
• External members serve a four-year term.
• For a meeting to proceed, a quorum of four members is required, with either the Governor or the Deputy Governor, who is an MPC member, present.
• Decisions of the MPC are made by a majority vote, with the RBI Governor having a casting vote in case of a tie.
• The MPC’s decisions are binding on the RBI.