Economics · Monetary Policy
The Monetary Policy Framework Agreement (MPFA) between the Government of India and the Reserve Bank of India underpins India's flexible inflation targeting framework. Consider the following statements: 1. The inflation target is set by the Central Government, in consultation with the RBI, for a period of five years. 2. The upper tolerance band for CPI inflation is currently set at 6%, with the target being 4%. 3. Failure to maintain inflation within the tolerance band for three consecutive quarters triggers an automatic mandatory repo rate hike. 4. The Monetary Policy Committee (MPC) consists of six members — three from the RBI (including the Governor) and three external members appointed by the Government. Which of the statements given above are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 12, 3 and 4 only
- 22 and 3 only
- 31, 2 and 4 only✓
- 41 and 4 only
Correct answer
1, 2 and 4 only
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