• The primary role of the  Monetary Policy Committee(MPC) is to maintain price stability by targeting a specific inflation rate. 

  • In many countries, including India, the MPC is mandated to achieve a specific inflation target over a defined period.

  • The MPC formulates and implements monetary policy measures to control inflation and maintain price stability. 

  • It sets the key policy interest rate, such as the repo rate, which influences borrowing costs, credit availability, and overall economic activity.

  • The MPC analyzes various economic data, including inflation indicators, GDP growth, employment figures, and other relevant macroeconomic variables. 

  • This analysis helps the committee assess the current and future inflationary pressures in the economy.

  • The MPC comprises a group of experts, including central bank officials and external members, who bring diverse perspectives and expertise to the table. 

  • Through deliberations and discussions, the committee makes informed decisions on interest rates and other policy measures to ensure price stability.

  • The MPC provides forward guidance to the market and stakeholders about its future policy actions. 

  • This guidance helps businesses, investors, and consumers make informed decisions and adjust their expectations regarding future interest rates and inflation.

  • The MPC's decisions strike a balance between promoting economic growth and maintaining price stability. 

  • While the committee aims to support growth, it also ensures that inflation remains within the desired target range to avoid any adverse impact on the economy.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Role of MPC UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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