The MPC decides on key policy rates such as the repo rate, reverse repo rate, and marginal standing facility (MSF) rate. Changes in these rates influence borrowing costs for businesses and consumers, impacting investment, consumption, and inflation.
The RBI has an inflation-targeting mandate. MPC meetings often focus on setting or adjusting inflation targets, which affect monetary policy decisions and market expectations regarding price stability
MPC meetings evaluate the state of the economy, including GDP growth, industrial production, employment trends, and other macroeconomic indicators. Decisions made by the MPC can stimulate or moderate economic growth through monetary policy adjustments.
Changes in RBI's monetary policy can influence currency exchange rates. MPC decisions may affect the value of the Indian rupee relative to other currencies, impacting trade balances, foreign investment, and capital flows.
The MPC's decisions and accompanying statements provide insights into the central bank's assessment of current economic conditions and future policy directions. Market participants closely monitor MPC meetings for signals about future interest rate movements and policy stances.