- By Aditya Pratap Singh
- Wed, 03 Apr 2024 03:11 PM (IST)
- Source:JND
RBI MPC Meeting: The Reserve Bank of India's six-member Monetary Policy Committee (RBI MPC Meet) has begun a three-day meeting today, i.e. Wednesday. This is the first MPC meeting for the Financial Year 2024-25. The committee members will meet for two more days and the decisions taken during these days will be announced by the RBI Governor on April 5, 2024.
The RBI Monetary Review Meeting is held every two months. This is the first meeting of the fiscal year 2024-25. The key decision being discussed in the meeting is the repo rate, any change to it will have an impact on the banking and financial sectors and common citizens will also be affected by it.
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Why does the MPC meet every two months?
The question arises why this meeting is held every two months and what is the connection of this meeting with the public? Inflation keeps changing depending on various domestic and international developments. In such a situation, whenever inflation increases, the demand and supply of essential items begin to fluctuate. To tackle the situation, the Reserve Bank meets every second month to balance supply and demand by revising the repo rate.
The MPC meeting lasts for three days. On the third day, the RBI Governor announces the decision taken in the meeting. According to the rules, the central bank must hold AMPC meetings four times in a financial year. The decision on when and at what intervals the MPC meeting will be held is taken by the committee. If in any year the committee decides to meet more than four times a year, then it has to issue a notification for the same.
Why does the repo rate change?
To control inflation in the country, the central bank changes the repo rate. The repo rate is the rate at which the central bank gives loans to other banks. Whenever inflation becomes high, the bank increases the repo rate to reduce the negative cash flow in the economy. At the same time, if the country's economy goes through a bad phase, then the money flow is increased by cutting the repo rate. The RBI had increased the repo rate to 6.5 percent in February 2023. Since then there has been no change in the repo rate.