Question: In the Fourth Bi-monthly Monetary Policy Statement, 2016-17, on the basis of an assessment of the current and evolving macroeconomic situation at the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by-
(a) 20 basis points
(b) 50 basis points
(c) 25 basis points
(d) 35 basis points
Ans: (c)
Related facts:
- On 4 October 2016 the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) headed by newly appointed governor of RBI Urjit Patel released the fourth Bi-monthly Monetary Policy Statement, 2016-17.
- The six member committee includes the Governor of the Bank—Chairperson, ex officio, Deputy Governor of the Bank, in charge of Monetary Policy(Member), ex officio,One officer of the Bank to be nominated by the Central Board(Member), ex officio,Chetan Ghate, Professor, Indian Statistical Institute (ISI)(Member), Professor Pami Dua, Director, Delhi School of Economics (DSE)(Member),Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management (IIM), Ahmedabad(Member).
- On the basis of an assessment of the current and evolving macroeconomic situation the Monetary Policy Committee (MPC) reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect.
- On 5 April 2016 Dr. Raghuram G. Rajan, in his First Bi-monthly Monetary Policy Statement, 2016-17 has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.75 per cent to 6.5 per cent.
- The reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.
- Reserve Ratios Cash Reserve Ratio (CRR) of scheduled banks remains unchanged at 4.0 per cent of net demand and time liability (NDTL).
- Statutory Liquidity Ratio (SLR) also remains unchanged at 20.75 per cent.
- Inflation target remains 5% for March 2017.
- In the recently released provisional estimate of gross value added (GVA) for 2016-17 has been re-estimated to 7.2 per cent.
Reference:
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38224
http://pib.nic.in/newsite/PrintRelease.aspx?relid=151264
http://www.livemint.com/Politics/eTA07fSI1HXNq9H095ipRK/Govt-appoints-three-members-to-Monetary-Policy-Committee.html