2nd Monetary Policy: Why RBI Increased Policy Rates

Recently RBI has announced its 2nd monetary policy for FY 2018-19. It has increase Policy rate and takes a neutral stance. These are important information, but from exam perspective (exams like RBI Grade B, UPSC) the background of these policies are important.

Few questions which has been asked in UPSC CSE prelims and RBI Grade B Mains ( directly or indirectly) has been mentioned here. These questions can be answered by understanding the background of monetary policy. Also, the expected question in UPSC CSE prelims and RBI Grade B and CSE Mains are mentioned along with.

    1. With the change in Repo will Policy corridor changes ( Always, Maybe, Never)
    1. What could be a reason behind taking the decision of increasing repo ( Classify on basis of National and international)
    1. Monetary Policy Committee is entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level. But apart from inflation, there are other factors which MPC has to take into account. Discuss.
    1. Why the increase in gold price is an issue for a country like India. Why MPC assess the gold price while deciding the Policy rate.
    1. Some time along with an increase in Policy rate RBI takes the neutral stance, why?
    1. What is the role of inflation expectation in deciding Policy Rate
    1. If there is a problem in IRAN, then why govt. may have to increase the Repo rate.
    1. What are the Repo and Reverse Repo rate and how the increase in this rate may help in moderate the inflation
    1. What are the factors which may affect the crude oil price and why it meter to a country like India?
    1. How the tension in European countries going to affect India
  1. In today world Central Banks of a country cannot work in isolation. Discuss from RBI and Fed perspective.

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All these have been discussed in the following video.

You should discuss this question in the comment section. In case of any doubt, you may ask these questions in the comment section.

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