Q1. As per the RBI's current Monetary Policy Framework Agreement, what is the CPI inflation target and tolerance band for India from April 2026 to March 2031?
A 2% with a band of 0% to 4%
B 4% with a tolerance band of 2% to 6% Correct
C 5% with a band of 3% to 7%
D 6% with a band of 4% to 8%
Explanation
Under the Monetary Policy Framework Agreement notified by the Centre and extended for FY26 to FY31, the RBI targets 4% CPI inflation with a tolerance band of 2% to 6%. This framework, first adopted in 2016 on the recommendations of the Urjit Patel Committee, requires the RBI to submit a report to the Centre if inflation stays outside the band for three consecutive quarters.