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

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

Key Points

  • 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.

Related Questions

In the question below, a passage is given followed by three courses of actions numbered I, II and III. On the basis of the information given, you have to assume everything in the statement to be true, and then decide which of the following suggested courses of actions logically follow(s) for pursuing. Passage: India's retail inflation jumped from 6.09% in June to 6.93% in July as per the National Statistical Office (NSO) data released on August 13, 2020. The rise is fuelled mainly due to the surge in food prices, which soared by 10%. RBI, in its MPC meeting last week, had kept the repo rate unchanged with an accommodative policy stance. Courses of action: I. RBI must hike the repo rate in the upcoming MPC. II. The government must stop payments to farmers under PM-KISAN yojana as the hike in Food Prices will give them more remunerative prices. III. All citizens should start cultivating food on their own to counter food inflation.
The Monetary Policy Committee (MPC) is assigned with the task of the release of the Monetary Policy. Who among the following is the chairperson of MPC?
Examine the following statements: A. Repo rate is the rate at which the Reserve Bank of India borrows money from commercial banks within India. B. Reverse repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds. C. The RBI increased the repo-rate and reverse repo rate by 25 basis points to 6.5% and 6.25%, respectively on August 1, 2018 Choose the correct answer:
Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? 1. It decides the RBI's benchmark interest rates. 2. It is a 12-member body including the Governor of RBI and is reconstituted every year. 3. It functions under the chairmanship of the Union Finance Minister. Select the correct answer using the code given below:
Which of the following is/are Instruments of Monetary policy to control inflation. a) Cash Reserve Ratio (CRR) b) Reverse Repo Rate c) Bank Rate d) Marginal Standing Facility (MSF) e) Repo Rate f) Market Stabilisation Scheme (MSS)
Given below are two statements, one labelled as Assertion (A) and the other labelled as Reason (R). Read the statements and choose the correct answer:
Assertion (A) The nominal interest rate comprises of a real interest rate and an expected rate of inflation and it adjusts when the inflation rate is expected to change. Hence, in the perfect international capital markets, real rate of returns are equal in the two countries.
Reason (R) The international fisher effects states that the nominal interest rate differential must be equal to the expected inflation rate differential In the two countries.
Nine individuals - Z, Y, X, W, V, U, T, S and R - are the only candidates, who can serve on three committees-K1, K2 and K3, and each candidate should serve on exactly one of the committees. Committee K1 should consist of exactly one member more than committee K2. It is possible that there are no members in committee K3. Among Z, Y and X none can serve on committee 10. Among W, V and U none can serve on committee K2. Among T, S and R none can serve on committee K3. In case committee K2 is served by T and Z only, how many of the nine individuals should serve on committee K3?  Of the nine individuals, the largest number that can serve together on committee K3 is:
What is Repo rate according to the Monetary Policy Committee (MPC), in December 2021?
In February 2022, the six-member Monetary Policy Committee(MPC) headed by Reserve Bank of India (RBI) Governor Shaktikanta Das kept the repo rate how much per cent?
What is the repo rate given by the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) as on 7 April 2021?