Economics • Banking & FinanceMedium
What does the term 'Monetary Policy Committee (MPC)' entail in India after its establishment under the Reserve Bank of India Act, 1934?
A. A statutory six-member body responsible for fixing the benchmark policy interest rate to achieve inflation targets✓ Correct Answer
B. An advisory board appointed by the Ministry of Finance to manage foreign exchange reserves
C. A committee of commercial bank chief executives that sets prime lending rates
D. An oversight panel created by Parliament to audit RBI's currency printing operations
💡 Solution & Explanation
The Monetary Policy Committee is a statutory six-member body established under the amended Reserve Bank of India Act of 1934 to determine benchmark policy rates for inflation targeting. Options suggesting control by commercial banks or parliamentary panels misrepresent its statutory mandate. The Governor of the RBI serves as the ex-officio chairperson of the MPC.
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