Monetary Policy Committee Structure
Question
Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
Select the correct answer using the code given below:
- 1.
It decides the RBI's benchmark interest rates.
- 2.
It is a 12-member body including the Governor of RBI and is reconstituted every year.
- 3.
It functions under the chairmanship of the Union Finance Minister.
Options
1 only
1 and 2 only
3 only
2 and 3 only
Explanation
Statement 1 is correct: The Monetary Policy Committee (MPC) is responsible for deciding the RBI's benchmark interest rate (repo rate). Statement 2 is partially correct but misleading: The MPC has 6 members, not 12—including the RBI Governor, one RBI Deputy Governor, and three external members. It is reconstituted every four years, not annually. Statement 3 is incorrect: The MPC is chaired by the RBI Governor, not the Union Finance Minister. The Finance Minister participates as a member but does not chair it. Only statement 1 is fully and correctly stated. > MPC: 6 members (not 12), chaired by RBI Governor (not FM), decides repo rate, reconstituted every 4 years (not annually). Answer: (a).
Question details
Year
2017
Paper
GS Paper 1
Question
Q11
Subject
Economy
Sub-topic
RBI and Monetary Policy
Type
Statement-based
Difficulty
Medium
Nature
Static
Source hint
Current Affairs 2016-2017
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