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Zorluk: OrtaMonetary Policy Framework, RBI Mechanisms, Banking System, and Financial Markets

Under the flexible inflation targeting framework of the Reserve Bank of India (RBI), which financial metric serves as the official operational target of monetary policy?

  1. Weighted Average Call Rate (WACR)Cevap
  2. B
    Consumer Price Index (CPI) Combined headline inflation rate
  3. C
    91-day Treasury Bill yield rate
  4. D
    Broad Money (M3M_3) annual growth rate

Cevap

The Weighted Average Call Rate (WACR) serves as the official operational target of monetary policy in India.
In RBI's operational framework, monetary policy operations are calibrated to anchor the Weighted Average Call Rate (WACR) around the policy Repo Rate. The WACR reflects the cost of uncollateralized overnight borrowing among commercial banks, making it the immediate operational target of liquidity management.

Adım Adım Çözüm

1
Identify the distinction between the nominal anchor, intermediate target, and operational target in the RBI's monetary policy framework.
The nominal anchor is headline CPI inflation (4%±2%4\% \pm 2\%). The operational target is the overnight uncollateralized call money rate, specifically the Weighted Average Call Rate (WACR).
Monetary policy operations (like LAF Repo, SDF, MSF, and OMO) are designed to steer day-to-day money market rates so that WACR closely tracks the policy Repo Rate.
2
Evaluate the option choices against the operational target definition.
WACR is directly guided by RBI's Liquidity Adjustment Facility (LAF) corridor to transmit policy rates across the broader financial system.
Aligning WACR with the policy Repo Rate ensures smooth transmission of monetary signals to bank lending and deposit rates.

Anahtar Kavram

Operational Target of RBI Monetary Policy
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Monetary Policy Framework, RBI Mechanisms, Banking System, and Financial Markets