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Question

Which of the following is not an assumption of the Monetary Policy Committee of April 2022?

A To Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent Correct Answer Incorrect Answer
B The marginal standing facility (MSF) rate and the Bank Rate remain unchanged at 4.25 per cent. Correct Answer Incorrect Answer
C The standing deposit facility (SDF) rate, which will now be the floor of the LAF corridor, will be at 4.75 per cent. Correct Answer Incorrect Answer
D Focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. Correct Answer Incorrect Answer
E Alll are true Correct Answer Incorrect Answer

Solution

On the basis of an assessment of the current and evolving macroeconomic situation, the Monetary Policy Committee (MPC) at its meeting today (April 8, 2022) decided to: keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 4.0 per cent. The marginal standing facility (MSF) rate and the Bank Rate remain unchanged at 4.25 per cent. The standing deposit facility (SDF) rate, which will now be the floor of the LAF corridor, will be at 4.75 per cent. The MPC also decided to remain accommodative while focusing on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

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