Definition: A statutory body constituted under the RBI Act, 1934, responsible for determining the policy rate (Repo Rate) to achieve the inflation target. It consists of 6 members: 3 from the RBI (including the Governor) and 3 appointed by the Central Government.

Key Points for Prelims:

• Inflation target is 4% CPI with a tolerance band of ±2%.

• Decisions are taken by majority vote, with the RBI Governor having a casting vote.

• MPC recommendations are binding on the RBI.