BANKING AFFAIRS

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

In the opinion of the Governor of Reserve Bank of India, which one of the following is the reason owing to which india’s inflation is accelerating?

A	Excess liquidity in market.
B	Speculation in essential goods
C	Higher Food cost
D	Commodities Futures

Explanation:

Detailed explanation-1: -The RBI controls Inflation and Deflation by employing a variety of monetary policy tools such as Repo Rate, Reverse Repo Rate, Bank Rate, Open Market Operations, Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Liquidity Adjustment Facility (LAF), Market Stabilisation Scheme.

Detailed explanation-2: -Control of RBI on Inflation and Deflation The control of inflation is one of the RBI’s primary duties. The RBI adjusts interest rates to control inflation. Inflation levels go down as consumers reduce their spending and prices stop rising. On the other hand, deflation gives the RBI room to cut interest rates.

Detailed explanation-3: -The central bank forecasts the CPI inflation to be around 6.6 percent in October-December 2022, 5.9 percent in January-March 2023, 5.0 percent in April-June 2023, and 5.4 percent in July-September 2023.

Detailed explanation-4: -On the assumption of a normal monsoon, CPI inflation is projected at 5.3 per cent for 2023-24, with Q1 at 5.0 per cent, Q2 at 5.4 per cent, Q3 at 5.4 per cent and Q4 at 5.6 per cent, and risks evenly balanced (Chart 1).

There is 1 question to complete.