Question
The repo rate is decided by which body under the current framework of the RBI Act?
Solution
Under the framework introduced by the 2016 amendment to the RBI Act, the policy repo rate is decided by the Monetary Policy Committee. The MPC sets the repo rate to achieve the inflation target set by the government. Earlier, the rate was set by the Governor based on internal advice. The shift to a committee-based decision enhanced transparency, accountability and credibility of monetary policy in India.
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