Q. Consider the following statements:
1.The meetings of the Monetary Policy Committee (MPC) are held at least four times a year.
2.An expansionary monetary policy implemented by the MPC would include raising the marginal standing facility (MSF) rate.
Which of the statement(s) given above is/are correct?
Answer: A
Notes:
Explanation –
Statement 1 is correct. The Monetary Policy Committee (MPC) is a committee of the Reserve Bank of India (RBI) that is responsible for fixing the benchmark interest rate in India. The meetings of the MPC are held at least four times a year, as per the RBI’s guidelines. It is headed by the Governor of the RBI.
Statement 2 is incorrect. The Marginal Standing Facility rate is the interest rate at which banks can borrow overnight funds from the central bank when they face short-term liquidity challenges. Expansionary monetary policy aims to stimulate economic growth by making it cheaper for businesses and individuals to borrow money. To achieve this, the MPC would lower interest rates, including the MSF rate.
Source: Forum IAS
