The newly constituted six-member Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel will hold its first meeting on October 3 and 4 to decided on key interest rate.
"The MPC will meet on October 3 and 4, 2016 for the fourth bi-monthly monetary policy review for 2016-17. The resolution of the MPC will be placed on the website at 2.30 pm on October 4, 2016," the Reserve Bank said in a statement.
Till now, the RBI Governor used to decide on key policy rates, including the repo rate or short-term lending rate.
However, this time the all-powerful interest-rate setting panel, whose constitution was notified by the government yesterday, will take call on interest rate.
The MPC, in which three members are from the RBI and three others nominated by the government, will target to keep inflation at 4 per cent with an upper and lower tolerance level of 2 per cent.
Each of the six members on the MPC will have one vote. In the case of a tie, the RBI Governor will have a casting vote in deciding on the rate as guided by newly-established inflation framework. He, however, would not be able to veto a majority decision.
"A Committee-based approach for determining the monetary policy will add lot of value and transparency to monetary policy decisions," the finance ministry had said earlier.
The government has named three academics to join RBI Governor Urjit Patel, his deputy in charge of monetary policy R Gandhi and central bank executive director Michael Patra on the MPC.
The government nominated members are: Chetan Ghate (Professor, Indian Statistical Institute), Pami Dua (Director, Delhi School of Economics) and Ravindra H Dholakia (Professor, Indian Institute of Management, Ahmedabad).
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