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      Question

      Consider the following Statements and choose the option

      with Correct Statements. I- Monetary Policy Committee comprises of six members from RBI where Governor RBI acts as an ex-officio chairman. II- Current inflation target is pegged at 4% with -2/+2 tolerance. III- Inflation target is to be set once in a five year by the RBI and no consultation is required from the Government of India.
      A Only I Correct Answer Incorrect Answer
      B I & II Correct Answer Incorrect Answer
      C II & III Correct Answer Incorrect Answer
      D Only II Correct Answer Incorrect Answer
      E I, II, & III Correct Answer Incorrect Answer

      Solution

      Monetary Policy Committee was created in 2016 to bring transparency and accountability in deciding monetary policy. MPC determines the policy interest rate required to achieve the inflation target. Committee comprises of six members where Governor RBI acts as an ex-officio chairman. Three members are from RBI and three are selected by government. Inflation target is to be set once in a five year. It is set by the Government of India, in consultation with the Reserve Bank. Current inflation target is pegged at 4% with -2/+2 tolerance.

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