UPSC Previous Year Question | Prelims GS | 2017

Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)? 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. Select the correct answer using the code given below:

  1. 1 only
  2. 1 and 2 only
  3. 3 only
  4. 2 and 3 only

Answer

Correct Answer

1 only

Explanation

The MPC decides the RBI's benchmark policy (repo) rate, so statement 1 is correct. It is a 6-member body (not 12) chaired by the RBI Governor (not the Finance Minister), so statements 2 and 3 are wrong.

Topics: economy, monetary policy, monetary policy committee, rbi institutions