Question

    What is the Inflation target range set by Monetary

    Policy Committee as of February 2019?
    A Target: 3%, Upper tolerance level: 5%, Lower tolerance level: 1% Correct Answer Incorrect Answer
    B Target: 4%, Upper tolerance level: 6%, Lower tolerance level: 2% Correct Answer Incorrect Answer
    C Target: 6%, Upper tolerance level: 3%, Lower tolerance level: 9% Correct Answer Incorrect Answer
    D Target: 4%, Upper tolerance level: 3%, Lower tolerance level: 5% Correct Answer Incorrect Answer
    E No such target specified Correct Answer Incorrect Answer

    Solution

    The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. Price stability is a necessary precondition to sustainable growth. In May 2016; the Reserve Bank of India (RBI) Act, 1934 was amended to provide a statutory basis for the implementation of the flexible inflation targeting framework. The amended RBI Act also provides for the inflation target to be set by the Government of India, in consultation with the Reserve Bank, once in every 5 years. Accordingly, the Central Government has notified in the Official Gazette 4 % Consumer Price Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper tolerance limit of 6 % and the lower tolerance limit of 2%

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