Question
Download Solution PDFThe graph given below indicates the changes in key policy rates made by the Central Bank several times in a year:
Which one of the following can be the most likely reason for the Central bank for such an action?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFCalculations:
From July '2' to June '16' it is almost one year. In this duration repo rate and reverse repo rate is going to increase continuously Wherever CRR is fixed. This only happens to control the inflation in the market. So whenever the central bank resists the policy rate, it is a way to suck out liquidity from the system. Normally this is due to the central bank expectation of rising inflation. Hence a continuously rising repo rate indicates an anti-inflationary stance.
∴ Option 4 is correct
Last updated on Jun 14, 2025
-> Candidates can check out the Daily Headlines for 13th June UPSC Current Affairs.
-> The UPSC CSE and IFS result has been released @upsc.gov.in on 11 June, 2025. Check UPSC Prelims Result 2025, UPSC IFS Result 2025
-> UPSC Launches New Online Portal upsconline.nic.in. Check OTR Registration Process.
-> Check UPSC Prelims 2025 Exam Analysis and UPSC Prelims 2025 Question Paper for GS Paper 1 & CSAT.
-> UPSC 2024 Prelims Answer Key released on 21st May 2025 at upsc.gov.in for Paper 1, 2.
-> The UPSC Civil Services Notification 2025 was out on 22nd January, 2025 and the UPSC 2025 Prelims exam date is 25th May, 2025. Now, the UPSC Mains 2025 will be conducted from 22 August, 2025 onwards!
-> Calculate your Prelims score using the UPSC Marks Calculator.
-> Go through the UPSC Previous Year Papers and UPSC Civil Services Test Series to enhance your preparation.
-> Check Axiom-4 mission: Indian Astronaut Shubhanshu Shukla's AX-4 mission Launch Date & Time
-> PM Kisan 20th Installment Date 2025: Beneficiary Status & List, Check eKYC Process