The current Agreement on Monetary Policy Framework has adopted inflation as the nominal anchor of mo...........

Economic Affairs Money Supply and Monetary Policy

The current Agreement on Monetary Policy Framework has adopted inflation as the nominal anchor of monetary policy. It was recommended recently by a committee headed by:

Nachiket Mor

R.M Lodha

Urjit Patel

P.J. Nayak

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Explanation:

Urjit Patel Committee in its report had given such recommendations.

Recommendations of the Urjit R Patel committee:

RBI should adopt the new Consumer Price Index (CPI) for anchoring the monetary policy.
Set the inflation target at 4% with a band of +/- 2% around it.
Monetary policy decision making should be vested in a Monetary Policy Committee (MPC) that should be headed by the Governor.
The two schemes- Dependence on Market Stabilisation Scheme (MSS) and Cash Management Bills (CMBs) may be discontinue and the government debt and cash management must be taken over by the government’s Debt Management Office.
All fixed income financial products should be treated on par with the bank deposits for the purposes of taxation and TDS.
Detachment of Open Market Operations (OMOs) from the fiscal operations and instead linked solely to the liquidity management. OMOs should not be used for managing yields on government on government securities.