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Consider the following statements about Monetary Policy Committee (MPC):
1. Its members are appointed by the President on the recommendations of the Central Government.
2. Its core mandate is to fix the benchmark policy interest rate to contain inflation within the target level.
3. It is headed by the Governor of RBI.
Which of the statements given above is/are correct?
1. Its members are appointed by the President on the recommendations of the Central Government.
2. Its core mandate is to fix the benchmark policy interest rate to contain inflation within the target level.
3. It is headed by the Governor of RBI.
Which of the statements given above is/are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)1, 2 and 3
Correct answer is option 'B'. Can you explain this answer?
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Consider the following statements aboutMonetary Policy Committee (MPC)...
Explanation:
The Monetary Policy Committee (MPC) is a committee constituted by the Reserve Bank of India (RBI) under the provisions of the Reserve Bank of India Act, 1934. The MPC is responsible for determining the policy interest rate and taking decisions related to monetary policy in India. Let's evaluate each statement given in the question:
Statement 1: Its members are appointed by the President on the recommendations of the Central Government.
- This statement is incorrect. The members of the MPC are not appointed by the President. They are appointed by the Central Government.
Statement 2: Its core mandate is to fix the benchmark policy interest rate to contain inflation within the target level.
- This statement is correct. The core mandate of the MPC is to maintain price stability and keep inflation within a target level. The benchmark policy interest rate, also known as the repo rate, is one of the tools used by the MPC to achieve this objective.
Statement 3: It is headed by the Governor of RBI.
- This statement is incorrect. The MPC is not headed by the Governor of RBI. The Governor of RBI is a member of the MPC, but the committee is actually headed by a Chairperson who is elected by the members of the committee.
Therefore, the correct answer is option 'B' - 2 and 3 only. The members of the MPC are appointed by the Central Government, not the President. The core mandate of the MPC is to fix the benchmark policy interest rate to contain inflation within the target level. And, the MPC is headed by a Chairperson, not the Governor of RBI.
The Monetary Policy Committee (MPC) is a committee constituted by the Reserve Bank of India (RBI) under the provisions of the Reserve Bank of India Act, 1934. The MPC is responsible for determining the policy interest rate and taking decisions related to monetary policy in India. Let's evaluate each statement given in the question:
Statement 1: Its members are appointed by the President on the recommendations of the Central Government.
- This statement is incorrect. The members of the MPC are not appointed by the President. They are appointed by the Central Government.
Statement 2: Its core mandate is to fix the benchmark policy interest rate to contain inflation within the target level.
- This statement is correct. The core mandate of the MPC is to maintain price stability and keep inflation within a target level. The benchmark policy interest rate, also known as the repo rate, is one of the tools used by the MPC to achieve this objective.
Statement 3: It is headed by the Governor of RBI.
- This statement is incorrect. The MPC is not headed by the Governor of RBI. The Governor of RBI is a member of the MPC, but the committee is actually headed by a Chairperson who is elected by the members of the committee.
Therefore, the correct answer is option 'B' - 2 and 3 only. The members of the MPC are appointed by the Central Government, not the President. The core mandate of the MPC is to fix the benchmark policy interest rate to contain inflation within the target level. And, the MPC is headed by a Chairperson, not the Governor of RBI.
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Consider the following statements aboutMonetary Policy Committee (MPC)...
It is a 6 member body.3 members are nominated by the central government and 3 are from the RBI. It sets the policy rate to keep inflation within the band decided by the central government
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Consider the following statements aboutMonetary Policy Committee (MPC):1. Its members are appointed by the President onthe recommendations of the CentralGovernment.2. Its core mandate is to fix the benchmark policyinterest rate to contain inflation within thetarget level.3. It is headed by the Governor of RBI.Which of the statements given above is/arecorrect?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)1, 2 and 3Correct answer is option 'B'. Can you explain this answer?
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