| Which of the following statements are true regarding the recommendations of Urjit panel Committee? |
| 1. CPI lower than 2% is good for economy but CPI higher than 6% is bad for the economy. |
| 2. RBI should continue with multiple indicator method to frame monetary policy. |
| 3. To combat inflation RBI should keep repo rate lower than CPI. |
| Select the correct answer using the codes given below: |
A) 1 and 2 only
B) 1, 2 and 3
C) 1 and 3 only
D) none of the .above
Correct Answer: D
Solution :
[d] Urjit panel Committee appointed to examine the current monetary policy framework of the Reserve Bank of India (RBI) has suggested that the apex bank should adopt the new CPI (consumer price index) as the measure of the nominal anchor for policy communication. The committee felt that inflation should be the nominal anchor for the monetary policy framework. The nominal anchor or the target for inflation should be set at 4 per cent with a band of \[+/-2\] percent around it. The Patel panel felt that the monetary policy decision-making should be vested with a monetary policy committee (MPC). It went on to recommend that the Governor of the RBI should be the Chairman of the MPC.
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