Economics • Indian EconomyEasy
Which organization is legally empowered to formulate and announce the monetary policy framework in India?
A. Ministry of Finance, Department of Economic Affairs
B. Reserve Bank of India Monetary Policy Committee✓ Correct Answer
C. NITI Aayog Governing Council
D. Securities and Exchange Board of India
💡 Solution & Explanation
The Monetary Policy Committee is a statutory body constituted under Section 45ZB of the Reserve Bank of India Act, 1934, tasked with fixing the benchmark interest rate to maintain price stability. It comprises six members, including the RBI Governor who serves as the ex-officio chairperson. This institutional mechanism replaced the older system where the central bank governor exercised sole authority over interest rate adjustments.
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