UPSC Prelims Practice Questions — MPC factors in ceasefire to keep repo rate unchanged
Q1. Under the Reserve Bank of India Act, 1934 (as amended in 2016), how many members constitute the Monetary Policy Committee (MPC)?
- A. Four
- B. Five
- C. Six
- D. Seven
Q2. The Monetary Policy Committee is constituted by notification in the Official Gazette by which of the following authorities?
- A. The Central Board of the Reserve Bank of India
- B. The Central Government
- C. The Financial Stability and Development Council
- D. The Securities and Exchange Board of India
Q3. Under the RBI's liquidity operations, which facility allows banks to borrow overnight funds from the Reserve Bank at a penal rate by dipping into their Statutory Liquidity Ratio (SLR) portfolio?
- A. Standing Deposit Facility (SDF)
- B. Marginal Standing Facility (MSF)
- C. Variable Rate Reverse Repo (VRRR)
- D. Open Market Operations (OMO)
Q4. Which one of the following rates forms the upper bound (ceiling) of the RBI's Liquidity Adjustment Facility (LAF) corridor?
- A. Standing Deposit Facility (SDF) rate
- B. Policy repo rate
- C. Marginal Standing Facility (MSF) rate
- D. Reverse repo rate
Q5. In its first bi-monthly monetary policy for FY 2026-27 (announced April 2026), by how many basis points did the MPC change the policy repo rate?
- A. 0 basis points
- B. 25 basis points
- C. 50 basis points
- D. 70 basis points
Q6. The April 2026 monetary policy that held the repo rate at 5.25% with a neutral stance was announced under the chairship of which RBI Governor?
- A. Shaktikanta Das
- B. Sanjay Malhotra
- C. Urjit Patel
- D. Raghuram Rajan
Q7. With reference to the projections in the RBI's April 2026 (first bi-monthly, FY 2026-27) monetary policy statement, consider the following statements:
1. FY27 real GDP growth was projected at 6.9%, lower than the growth estimated for the previous fiscal.
2. FY27 CPI inflation was projected at 4.6%, which lies within the notified tolerance band.
3. The FY27 CPI inflation projection was placed below the lower tolerance limit of the inflation target.
Which of the statements given above is/are correct?
- FY27 real GDP growth was projected at 6.9%, lower than the growth estimated for the previous fiscal.
- FY27 CPI inflation was projected at 4.6%, which lies within the notified tolerance band.
- The FY27 CPI inflation projection was placed below the lower tolerance limit of the inflation target.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Q8. Consider the following figures attributed to the RBI's April 2026 (first bi-monthly, FY 2026-27) monetary policy statement:
1. FY27 real GDP growth — 6.9%
2. FY27 CPI inflation — 4.6%
3. Previous fiscal (FY26) real GDP growth estimate — 7.6%
4. Policy repo rate — 5.50%
Which of the above is/are correctly identified?
- FY27 real GDP growth — 6.9%
- FY27 CPI inflation — 4.6%
- Previous fiscal (FY26) real GDP growth estimate — 7.6%
- Policy repo rate — 5.50%
- A. 1, 2 and 3 only
- B. 2 and 4 only
- C. 1 and 4 only
- D. 1, 2, 3 and 4
Q9. Consider the following as features of India's Flexible Inflation Targeting (FIT) framework:
1. A Consumer Price Index (CPI) inflation target of 4%.
2. An upper tolerance limit of 6%.
3. Determination of the inflation target once every five years.
4. A lower tolerance limit of zero per cent (0%).
Which of the above is/are NOT correct?
- A Consumer Price Index (CPI) inflation target of 4%.
- An upper tolerance limit of 6%.
- Determination of the inflation target once every five years.
- A lower tolerance limit of zero per cent (0%).
- A. 1 only
- B. 3 only
- C. 4 only
- D. 2 and 4 only
Q10. Under India's Flexible Inflation Targeting framework, the inflation target in terms of the Consumer Price Index is determined once every five years by whom?
- A. The Reserve Bank of India, in consultation with the Central Government
- B. The Central Government, in consultation with the Reserve Bank of India
- C. The Monetary Policy Committee alone
- D. The Central Board of the Reserve Bank of India alone
Q11. As of March 2026, approximately what share of India's crude oil imports was being routed through sources/routes lying OUTSIDE the Strait of Hormuz?
- A. About 30%
- B. About 50%
- C. About 70%
- D. About 90%
Q12. Among the RBI's monetary policy stances, which one is the most flexible — signalling that the central bank keeps open the option of moving the policy rate in either direction, giving equal weight to inflation and growth?
- A. Accommodative
- B. Neutral
- C. Withdrawal of accommodation
- D. Calibrated tightening