Short Article
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Repo Rate
The interest rate at which commercial banks borrow money from the central bank of the country is known as the Repo Rate.
Key Highlights
- The repo rate is decided by the Monetary Policy Committee (MPC) of the RBI.
- Current Repo Rate: 6.5 per cent.
About Monetary Policy Committee
- It is a 6-member committee in which 3 officials are from the Reserve Bank of India and 3 external members are nominated by the central government.
- It is a statutory body constituted under the RBI Act of 1934.
- The MPC is led by the RBI governor.
- The first MPC was constituted in 2016.
- RBI’s MPC Committee is supposed to meet every 2-2 months and is required to meet at least four times a year.
- Quorum: A minimum of four participants are required for the meeting.
- Each member of the committee has one vote, and in the case of an equality of votes, the Governor has a second or casting vote.
- Each Member of the committee writes a statement defining the reasons for voting in favour of, or against the proposed resolution.
- The MPC determines the policy repo rate required to achieve the inflation target.