Recommendation to THE MPC TO KEEP THE CPI WITHIN THE TARGET RANGE
Answers
EXPLANATION:
The responsibility of the MPC is to keep the ‘inflation rate’ under control. The recommendations are to include services and hospitality sector under the new CPI sector. Since the service sector is doing very well in India. The demographic factors should be considered in the Multiple Indicator Approach of managing the level of inflation in the country.
The Central Government consults with the RBI and takes into account the Consumer Price Index (CPI) for determining the inflation target once in every five years. The RBI in consultation with Central government keeps a check on inflation by keeping a benchmark on the policy rate.
The monetary policy requires keeping the prices stable in the economy. The Multiple Indicator Approach should manage the growth and inflation in the country.