The six-member Monetary Policy Committee and India's flexible inflation targeting framework

Background

The Monetary Policy Committee has just raised the policy repo rate to 5.50 per cent at its meeting of October 5 to 7, 2026, which puts the framework it works under back in the news. Section 45ZB of the Reserve Bank of India Act, 1934 provides for an empowered six-member Monetary Policy Committee. The Governor is its ex officio Chairperson, and the Deputy Governor in charge of monetary policy and one officer of the Bank nominated by the Central Board are the other ex officio members. The three external members notified on October 1, 2024 are Dr. Nagesh Kumar, Shri Saugata Bhattacharya and Prof. Ram Singh, who hold office for four years or until further orders, whichever is earlier. The Committee meets at least four times a year, the quorum is four members, each member has one vote and the Governor has a second or casting vote in case of a tie. Under Section 45ZA the Central Government, in consultation with the Reserve Bank, sets the consumer price index inflation target once every five years; it is 4 per cent with a tolerance band of 2 to 6 per cent, retained for April 2026 to March 2031.