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With reference to the Monetary Policy Committee (MPC), consider the following statements:
1. Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the RBI Act.
2. MPC shall determine the Policy Rate required to achieve the inflation target.
Which of the statements given above is/are correct?
  • a)
    1 only
  • b)
    2 only
  • c)
    Both 1 and 2
  • d)
    Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
With reference to the Monetary Policy Committee (MPC), consider the fo...
Monetary Policy Committee (MPC)
  • Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the RBI Act.
  • The primary objective of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth.
  • In May 2016, the RBI Act was amended to provide a legislative mandate to the central bank to operate the country’s monetary policy framework.
  • This amendment lays down that
  • MPC shall determine the Policy Rate required to achieve the inflation target”,
  • that the decision of the MPC shall be binding on the Bank.
Hence both statements are correct.
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With reference to the Monetary Policy Committee (MPC), consider the following statements:1. Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in theRBI Act.2. MPCshall determine thePolicy Rate required to achieve the inflation target.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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