GS3 › Money, Banking and Monetary Policy

Revision note: Monetary Policy, Inflation Targeting and the MPC

  • FIT: Urjit Patel Committee 2014; MPFA Feb 2015; RBI Act amended 2016 (s.45ZA); CPI 4% ±2%, set every 5 years; review due for post-March 2026 period
  • Failure = outside band for 3 consecutive quarters (first letter Nov 2022)
  • MPC: 6 members (3 RBI + 3 external for 4 years); Governor's casting vote; first meeting Oct 2016
  • Tools: repo (policy rate), SDF (floor, Apr 2022), MSF (ceiling), CRR (cut to 3% in 2025), SLR 18%, OMO; risk weights
  • Repo: 4.0% (2020) → 6.5% (Feb 2023) → 5.50% (June 2025)
  • Transmission: Base Rate 2010 → MCLR 2016 → external benchmark Oct 2019
  • CPI (NSO, base 2012, food ~46%; new base 2024 being introduced); WPI (DPIIT, no services); CPI-IW (Labour Bureau)
Revision card summarising Monetary Policy, Inflation Targeting and the MPC
One-page visual summary of the key points to revise.

Source: https://upscprep.in/upsc/gs3/money-banking-and-monetary-policy/monetary-policy-inflation-targeting-and-the-mpc/ · UPSCPrep.in

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