Which of the following is are correct w r t inflation targeting in India 1 Inflation targeting is e...........

Economic and Social Issues Monetary and Fiscal Policy

Which of the following is/are correct w.r.t. inflation targeting in India?

1. Inflation targeting is essentially a monetary policy of the Central Banks to maintain Inflation rate at a certain level or range.

2. Under Section 45ZA (1) of the RBI Act, 1934, the Central Government determines the inflation target in terms of the Consumer Price Index, once in every five years in consultation with the RBI.

3. MPC (Monetary Policy Committee) has been set up in India pursuant to the agreement reached between Government and RBI to task RBI with the responsibility for price stability and inflation targeting.

1 & 2 only

1 & 3 only

2 & 3 only

1,2 & 3

None of the options given above

छोटे Courses बड़े Results

Master Monetary and Fiscal Policy

Prepare through Micro-courses

Try Now

Explanation:

Interest rates are the primary tool central banks use in inflation targeting. The central bank will lower or raise interest rates based on whether it thinks inflation is below or above a target threshold. Raising interest rates is said to slow inflation and therefore slow economic growth. Lowering interest rates is believed to boost inflation and speed up economic growth. The benchmark used for inflation targeting is typically a price index of a basket of consumer goods, such as the Consumer Price Index (CPI) in India.