Economy & Business MCQs

Keeping the repo rate stable, especially at a level aimed at managing inflation, suggests the RBI is focused on controlling inflation and ensuring price stability.

The Monetary Policy Committee (MPC) is mandated by the RBI Act, 1934, to determine the policy repo rate required to meet the inflation target.

The RBI's Monetary Policy Committee (MPC) in its September 2026 meeting decided to keep the policy repo rate unchanged at 6.5%.

When inflation eases, the prices of goods and services rise at a slower rate, which means that consumers' money can buy more, thereby increasing their purchasing power.

The Government of India, in consultation with the RBI, has set a retail inflation target of 4% with a tolerance band of +/- 2%, meaning the target range is 2% to 6%. This framework was extended for another five years until March 31, 2026, and is expected to continue.

The Consumer Price Index (CPI) is the primary measure of retail inflation in India, reflecting changes in the prices of goods and services purchased by households.

The repo rate is the rate at which commercial banks borrow money from the RBI. If it is maintained, the cost for banks to borrow from the central bank remains unchanged, influencing their lending rates to customers.

The Monetary Policy Committee (MPC) is a statutory body of the RBI, constituted to determine the policy interest rates required to achieve the inflation target.

Maintaining the repo rate is a key monetary policy tool used by the RBI to manage liquidity, control inflation, and support economic growth, especially during periods of global economic uncertainty to provide stability.

Infrastructure projects are labor-intensive and require substantial inputs like cement, steel, and machinery, leading to direct job creation and boosting demand in allied sectors, thereby stimulating economic activity.