Consider the following statements regarding the Monetary Policy Committee (MPC) of India: 1. It is a statutory body constituted under the Reserve Bank of India Act, 1934. 2. It determines the policy interest rate required to achieve the inflation target. 3. The committee comprises a total of six members, out of which three are nominated by the central government and three are from the RBI. Which of the statements given above are correct?

💡 Solution & Explanation

The Monetary Policy Committee operates as a statutory and institutionalized body under Section 45ZB of the Reserve Bank of India Act, 1934, tasked with fixing the benchmark interest rate to manage inflation. It consists of six members in total, split evenly between three representatives from the central bank and three external experts appointed by the central government. This framework replaced the older single-governor monetary policy regime following recommendations from the Urjit Patel Committee.