At present, the RBI governor has the final say on monetary policy decisions. “Till now, the monetary policy has been decided by RBI, but this responsibility will soon shift to MPC. The rules have been notified but it does not talk about what will happen if MPC does not meet the inflation target. The government notified the rules for the procedure for election of members of MPC and what will constitute a failure to meet inflation target under the MPC framework. According to the monetary policy framework, agreed by RBI and the government last year, the central bank will look to contain inflation within a band of 4% plus/minus 2 percentage points from next year.

Source: Mint June 27, 2016 11:10 UTC