Monetary Policy Committee (MPC) is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation

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answered Mar 2, 2022 by ShreeHarpale (240k points)
selected Mar 2, 2022 by PrashantPandey

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Correct Answer - Option 4 : within the specified target level of 4% with a band of +/- 2%.

The correct answer is within the specified target level of 4% with a band of +/- 2%.

The Monetary Policy Committee (MPC) is a committee of the Reserve Bank of India, headed by its Governor.
The MPC is a statutory and institutionalized framework under the RBI Act, 1934, for maintaining price stability, while keeping in mind the objective of growth.
It is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level of 4% with a band of +/- 2%.
There are six members of the Monetary Policy Committee, three Members will be from the RBI and the other three members will be appointed by the Central Government.
The panel is required to meet at least four times a year.
- It should submit a report to the central government within one month from the date which the bank has failed to meet the inflation target.
There are two types of Monetary Policy instruments. They are
- Qualitative Instrument: Moral Suasion, Change in margin money and direct action.
- Quantitative Instrument: Cash Reserve Ratio, Repo Rate, Bank Rate, Statutory Liquidity Ratio, Liquidity Adjustment Facility, and Marginal Standing Facility.