Question

The following statements are on Monetary Policy Committee. Identify the wrong statement.

• A. The inflation target for the present period is between 1% PA (lower) and 7% PA (upper).
• B. The inflation target is fixed by the Central Government.
• C. The MPC have six members and came into existence in 2016.
• D. The MPC is required to meet at least four times in a year.

Answer 1

Answer:

A. The inflation target for the present period is between 1% PA (lower) and 7% PA (upper).

Monetary Policy Committee:

• Urijit Patel Committee first proposed the idea for the formation of a five-member Monetary Policy Committee.

• Later, the government proposed the setting up of a seven-member committee.

• MPC is assisted by the Monetary Policy Department (MPD) of the Reserve Bank in the formulation of the policy.

• The monetary Policy Committee came into force on 27th June 2016.

• The committee determines the policy interest rate required to achieve the inflation target.

• The MPC is required to meet at least four times in a year.

• The quorum for the meeting of the MPC is four members.

• Each member of the MPC has one vote, and in the event of an equality of votes, the Governor has a second or casting vote.

• Once every six months, the Reserve Bank is required to publish a document called the Monetary Policy Report to explain the sources of inflation and the forecasts of inflation for 6-18 months ahead.