Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC) and its policy stances? 1. The MPC is responsible for fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level. 2. A 'neutral' monetary policy stance indicates that the central bank has the flexibility to either raise or lower interest rates depending on upcoming economic data.

Question

Accepted Answer

C. Both 1 and 2 — The MPC determines the policy rate to achieve the inflation target (4% +/- 2%). A neutral stance means the central bank is neither accommodative nor tightening, giving it the flexibility to move rates in either direction based on evolving macroeconomic conditions.

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