Monetary Policy
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Free sample — 8 of 66 rapid-fire Q&A cards.
What is monetary policy?
Monetary policy is the set of actions taken by a country's central bank to control the money supply and achieve macroeconomic goals such as controlling inflation, managing employment levels, and stabilizing the currency.
What is the primary objective of monetary policy in India?
Maintaining price stability while keeping growth in mind.
Which body is responsible for formulating monetary policy in India?
The Reserve Bank of India (RBI) is responsible for formulating and implementing monetary policy in India, guided by the Monetary Policy Committee (MPC) since 2016.
How many members does the Monetary Policy Committee (MPC) of India have?
Six members — three from RBI and three external.
What is the Monetary Policy Committee (MPC) of India?
The MPC is a six-member statutory committee constituted under the RBI Act, 1934, responsible for fixing the benchmark policy interest rate (repo rate) to contain inflation within the target level.
What is the voting mechanism used in MPC meetings?
Each member has one vote; Governor has casting vote if tied.
What is the inflation target set for India under the flexible inflation targeting framework?
The inflation target for India is 4% (CPI-based), with an upper tolerance band of 6% and a lower tolerance band of 2%, as mandated by the Government of India.
How frequently does the MPC meet to decide monetary policy?
At least four times a year (bi-monthly meetings).
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