In view of elevated consumer price inflation of about 6.8 per cent, the Reserve Bank of India keeps the policy repo rate unchanged at a meeting of its Monetary Policy Committee. Under the Reserve Bank of India Act, 1934, as amended in 2016, the MPC is required to determine the policy rate keeping in view which inflation target notified by the Central Government?

The 2016 amendment to the Reserve Bank of India Act, 1934 inserted Sections 45ZA and 45ZB, under which the Central Government, in consultation with the Reserve Bank, notifies the inflation target to be pursued by the Monetary Policy Committee; the notified target is four per cent with a tolerance band of plus or minus two per cent. The MPC of six members, chaired by the Governor, determines the policy repo rate with a view to achieving this target in the medium term through the flexible inflation targeting framework. Targets of three or five per cent or bands narrower than two percentage points do not match the statutory notification. The MPC framework, operational since 2016, remains the core instrument of monetary policy in India.