Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
- It decides the RBI’s benchmark interest rates.
- It is a 12-member body including the Governor of RBI and is reconstituted every year.
- It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below :
Detailed Explanation:
Answer: Option 1 — 1 only
The Monetary Policy Committee (MPC) is the primary body responsible for deciding the RBI's benchmark interest rates, particularly the repo rate, which influences the overall monetary policy stance of the country. Only statement 1 is correct, while statements 2 and 3 contain factual inaccuracies regarding the composition and chairmanship of the MPC.
✅ Statement 1 – Correct: The MPC is mandated to decide the RBI's benchmark interest rates, especially the repo rate, which is the key policy rate for monetary policy decisions.
❌ Statement 2 – Incorrect: The MPC is a 6-member body (not 12), consisting of three members from the RBI (including the Governor) and three external members appointed by the Central Government for a four-year term; it is not reconstituted annually.
❌ Statement 3 – Incorrect: The MPC functions under the chairmanship of the Governor of RBI, not the Union Finance Minister.
Question 9 of 17 Monetary Policy
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